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Our Perspective

Texas federal district court finds for defendants in post-Jander stock drop case

On February 4, 2019, the United States District Court for the Southern District of Texas found for defendant fiduciaries in Fentress v. Exxon, an insider information-based stock drop case. In this article we briefly review the decision, considering it in the context of stock drop litigation generally and the recent decision (for plaintiffs) by the…Read More

January 2019 Pension Finance Update

Stock markets rallied in January, recouping a chunk of losses seen in the fourth quarter of 2018 and producing gains for pension finance last month. Both model plans we track[1] improved in January: Plan A gained almost 3%, while Plan B gained about 1%: Assets January was a very good month for stocks. The table below…Read More

Putnam requests Supreme Court review of active vs. passive management

On January 11, 2019, Putnam Investments LLC, fiduciaries of the Putnam 401(k) plan, and related persons filed a Petition for a Writ of Certiorari (in effect, a request for review) with the Supreme Court, requesting review of the First Circuit Court of Appeals’ October 15, 2018 decision for plaintiffs in Brotherson v. Putnam. The case,…Read More

Annuity Purchase Update: 2018 Interest Rates

January 2019 Duration: 7 Years 15 Years 7 Years 15 Years Range Rate: 3.01% – 3.45% 3.37% – 3.55% Average Rate: 3.18% 3.46% During 2018, the market experienced a favorable upward trend of rising interest rates which generally increased US defined benefit plan funding ratios. As interest rates climbed, plan liabilities dropped which led to…Read More

Plan design and 2018 market performance

In this article we consider the “gains” and “losses” sustained by retirement plans of different designs, based on the performance of the asset and interest rate markets in 2018. How, and in what different ways, did 2018 market performance affect participants in and sponsors of these plans? Summary We consider four different basic plan designs:…Read More

The HR Problem Confounding Hospital Systems: Recruiting and Retaining Physicians

The landscape surrounding physician employment has changed, and it has changed significantly. Where once physicians were largely self-employed and thus could enjoy earnings tied to each individual’s own level and choices of specialization and work, they now find themselves mostly employed by large health systems. And, as that new reality evolves, those health systems are…Read More

Student loan repayment programs: outstanding issues

On August 18, 2018, the Internal Revenue Service released Private Letter Ruling (PLR) 201833012, concluding that a 401(k) plan that provided for “an employer non-elective contribution on behalf of an employee conditioned on that employee making student loan re-payments” [emphasis added] did not violate the Internal Revenue Code section 401(k) prohibition on conditioning a benefit on…Read More

Current legislative outlook – January 2019

In this article we review the new committee leadership of the 116th Congress and note two significant Senate bipartisan retirement policy proposals introduced at the end of 2018. New committee leadership In the 116th Congress, the leadership of three of the four Congressional committees that oversee retirement policy has changed: Congressman Neal (D-MA) has taken…Read More

Second Circuit allows IBM stock drop case to proceed

On December 10, 2018, a three judge panel of the Second Circuit Court of Appeals, in Jander v. IBM, found for plaintiffs in stock drop litigation related to financial disclosure with respect to one of IBM’s divisions. The court held that where a sale of a division and ultimate disclosure of negative information was imminent,…Read More

December 2018 Pension Finance Update

December was the worst month for pensions in a decade, due to plunging stock markets and lower interest rates. Both model plans we track[1] gave back all 2018 gains to date and then some – Plan A lost 8% last month, ending 2018 down 1%, while the more conservative Plan B lost more than 2%…Read More