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Pension Funds Sue Silicon Valley Bank's Officers, Auditor KPMG Following Bank Failure

"Three pension funds have filed a class action lawsuit against officers and directors from Silicon Valley Bank's parent company, SVB Financial Group, and its auditor, KPMG LLP, for allegedly misrepresenting the strength of the company's balance sheet, liquidity and position in the market. SVB Financial Group and subsidiary SVB Securities were not named in the suit due to their ongoing bankruptcy proceedings.' [City of Hialeah Employees" Retirement System v. Becker, No. 23-1697 (N.D. Calif. complaint filed Apr. 7, 2023)]

Western States Office & Professional Employees Pension Fund Seeks Cuts

"The fund's board has proposed a 29% decrease for all participants and beneficiaries, but no reduction below 110% of the PBGC guaranteed benefit for each affected participant. Under the plan, disability pensions are not reduced, and participants who are age 80 or older on Dec. 31, 2017, have no reduction.... The Western States Office & Professional Employees Pension Fund was first certified to be in critical status with the Treasury Department in 2009, and is projected to become insolvent in 2035 if no changes are made."

DOL, Dubious About ESG Pension Investing, Cuts It a Bit of Slack in Final Rule

"The [DOL] on Friday eased its stance a small amount against environmental, social, and governance (ESG) investing, but it remained determined in its declaration in a final rule that [ERISA] plan fiduciaries must make investment decisions that won't sacrifice returns.... in its final rule, the DOL said it acknowledges that there are cases in which ESG factors could be considered financially material.... Still, the final rule that stipulates investors must solely use financial considerations for investments could continue to have a chilling effect on ESG investments. "

De-Risking Plans Suffer If They Don't Broaden Out to Alternative Investments

"The de-risking progression ... has reached a point of diminishing value, [a recent] study contended. It 'robs plans of the returns they need to remain fully funded and stable across time,' the report read. In short, returns suffer.... The report advocates peppering in the likes of real estate, emerging market debt, private credit, and hedge funds into portfolios."

CalSTRS Wants to Double Co-Investments

"CalSTRS's overall private equity returns for the one-year period ending March 31 totaled 15.5%, the largest return of any asset class. CalSTRS currently has 8.1% of its overall portfolio devoted to private equity, but its long-term target is 13%."

Should the PBGC Have Control Over Distressed Pensions' Investing?

"[A] financial economist ...[argues] that defined benefit plan sponsors become overly aggressive with pension portfolios when those funds enter distressed territory, because the PBGC's backing creates a moral hazard. In normal, non-distressed times ... the same corporate pension portfolio fulfills both stockholders' and members' best interests. When things get rocky, however, taking on more risk is optimal for shareholders, because even if the gamble fails, the plan is backstopped by the PBGC. Thus, moral hazard."

CalPERS Board Votes to Approve Total Portfolio Approach

"The California pension approved the proposed change to implement TPA -- the first institutional allocator in the U.S. to do so -- by July 2026.... The total portfolio approach views and manages portfolio assets under a single objective, in contrast to strategic asset allocation, in which separate asset classes are siloed and managed separately. TPA has become increasingly appealing for asset owners in recent years."

Growing Number of Pension Funds, Endowments, Foundations Adding Bitcoin to Portfolios

"Two pension funds in Fairfax, Virginia, began investing in late 2018 and 2019 in blockchain technology and Bitcoin through investments in two Morgan Creek Digital funds, which many consider the first investments in the crypto asset from a US pension fund. And a number of hedge funds, family offices, pension funds, endowments, foundations, asset managers, registered investment advisers (RIAs), and banks own Bitcoin outright through Boston-based Fidelity Digital Assets."

Unlocking 401(k) Innovation: Litigation Risk Is Stifling Thoughtful Stewardship

"The looming threat of costly, prolonged legal challenges discourages companies from exploring innovative solutions -- even those that might objectively serve participants' best interests. The primary concern is not an absence of fiduciary expertise, dedication or substantial regulatory ambiguity; rather, it is a litigation environment that inhibits constructive and meaningful dialogue.... Trump's executive order calls on agencies to clarify guidance and facilitate innovation and, importantly, to relieve the litigation risk currently faced by prudent fiduciaries."

How Companies with Frozen, Overfunded Pensions Approach the Future

"Corporate plan sponsors have increasingly turned to the pension risk transfer market to de-risk their plans, offloading the responsibility to pay for retiree benefits to an insurer. PRT volumes have never been higher. According to Aon, 2024 was another record year, with $51.8 billion in PRT volume across 785 transactions. Termination of a plan is still the ultimate end of most plans in surplus."