2025 Year in Review

In this article we review 2025 retirement policy. Generally, we are going to cover what happened in legislation, regulation, and litigation, in that order. But we’re going to begin with what, in our view, are the most significant developments.

Highlights

Litigation reform and the Supreme Court’s Cornell decision

Generally. Throughout 2025 there has been a (sometimes behind the scenes) effort by sponsors and providers, both in Congress and at DOL, to change the procedural requirements (and other rules) for a viable fiduciary lawsuit to reduce what is perceived as unwarranted ERISA retirement plan fiduciary litigation. We provided a series of articles analyzing the issues at play in this litigation reform project, covering litigation issues with respect to administrative fees, investment management fees, and investment ”underperformance.”

Cunningham v. Cornell University. On April 17, 2025, the Supreme Court handed down its decision in Cunningham v. Cornell University, holding that, to survive a motion to dismiss, a plaintiff bringing an ERISA prohibited transaction claim against plan fiduciaries with respect to fees paid to a service provider need not plead that there was no available exemption – effectively green-lighting (at least past a motion to dismiss) any claim with respect to service provider fees. The Cornell decision dramatically increased sponsor and policy maker concern about fiduciary litigation. After Cornell came down we provided an article, “Litigation’s bleeding edge,” highlighting the “worst case” outcomes for sponsors.

Legislation has already been introduced to provide a limited “fix” to Cornell, but politics are likely to kill any broader legislation. We do, however, expect some action at EBSA during 2026.

Risk transfer litigation

The spate of a pension risk transfer lawsuits are – on nearly identical facts – generating conflicting district court decisions on the same critical Constitutional issue: whether participants in DB plans have standing to sue on a claim of an ERISA fiduciary breach with respect to a pension risk transfer when they are (currently) receiving all benefits promised under the plan from the annuity carrier (in these cases, Athene Annuity and Life Co. and Athene Annuity & Life Assurance Company of New York) to whom those benefits have been transferred. Decisions on these facts/this issue in 2025 include:

Camire, et al. v. Alcoa USA Corp. On March 28, 2025, the District Court for the District of Columbia granted defendant Alcoa’s motion to dismiss based on its finding that plaintiffs did not have standing to sue under Article III of the US Constitution because they had not suffered an “‘injury in fact’ that is ‘concrete and particularized’ as well as ‘actual or imminent.’”

Konya et al. v. Lockheed Martin Corporation. On the same date, the District Court for the District of Maryland came to the opposite conclusion, stating that: “The Court believes that at this early stage, Plaintiffs have adequately alleged facts, if only barely so, sufficient to conclude there is ‘a substantially increased risk’ that Athene will fail and Plaintiffs' will suffer harm because of it. … As such, the Court finds they have eked out sufficient injury-in-fact to establish standing.”

Doherty, et al. v. Bristol Myers Squibb et al. On September 29, 2025, the District Court for the Southern District of New York denied (in critical parts) defendants Bristol Meyer Squibb’s (BMS) and State Street Global Advisors Trust Company’s (State Street) motions to dismiss.

Piercy et al. v. AT&T Inc. et al. On September 30, 2025, the District Court for the District of Massachusetts denied defendants’ motion to dismiss on standing but granted their motion to dismiss on the grounds that plaintiffs had failed to adequately state a claim under ERISA.

Schoen v. ATI. On October 7, 2025, the District Court for the Western District of Pennsylvania granted defendants’ motion to dismiss on the grounds that plaintiffs did not have standing to sue.

Given the conflicting opinions of these courts, and the Constitutional issue at stake, unless the Courts of Appeal can agree on a single approach to the fundamental issue of standing, this litigation may wind up in the Supreme Court.

Alternative assets Executive Order. On August 7, 2025, President Trump issued an Executive Order (EO), “Democratizing Access to Alternative Assets for 401(k) Investors,” instructing DOL to take action to clarify the ways in which the fiduciary of a participant directed defined contribution plan may include in the plan’s fund menu an asset allocation fund that includes alternative investments. “Alternatives” is defined broadly, including (among other things) “investment vehicles that are investing in digital assets” and of “lifetime income investment strategies including longevity risk-sharing pools.” DOL is to, in effect, clear a path for fiduciaries to include alternatives in, e.g., a target date fund, by “prioritize[ing] actions that may curb ERISA litigation that constrains fiduciaries’ ability to apply their best judgment in offering investment opportunities to relevant plan participants.”

Proxy advisory firm Executive Order. On December 11, 2025, President Trump issued an Executive Order “Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors.” The EO focuses on the role proxy advisors play in affecting corporate policy with respect to DEI and ESG issues, directing the Securities and Exchange Commission, the Federal Trade Commission, and the Department of Labor (with respect to “Pensions and Retirement Plans”) to “increase oversight of and take action to restore public confidence in the proxy advisor industry, including by promoting accountability, transparency, and competition.” With respect to ERISA-covered retirement plans, the EO instructs DOL “to consider” revising the current advice fiduciary regulation to explicitly include proxy advisors as ERISA advice fiduciaries.

DOL intends to revise ESG regulation. On September 21, 2023, the United States District Court for the Northern District of Texas, in Utah v. Walsh, upheld DOL’s 2022 amendment of its 2020 ESG investing and proxy voting rules, rejecting claims by 26 states and other interested parties that the rule violated ERISA and the Administrative Procedure Act (APA). The court found that “[t]he 2022 Rule changes little in substance from the 2020 Rule and other rulemakings” and that the process by which DOL (in 2022) amended the 2020 Rule adequately addressed issues raised by plaintiffs and was therefore not “arbitrary and capricious.” The plaintiffs in that case subsequently appealed this case to the Fifth Circuit. On May 28, 2025, the Fifth Circuit filed a “status update” stating that:

The Department [of Labor] has determined that it will engage in a new rulemaking on the subject of the challenged rule. This rulemaking will appear on the Department’s Spring Regulatory Agenda, and the Department intends to move through the rulemaking process as expeditiously as possible.

* * *

Let’s now move to a discussion of what else happened in 2025 …

Legislation

While Congress enacted no significant retirement policy legislation this year, there were a number of bills introduced, on a grab bag of issues, that may wind up becoming part of a comprehensive retirement policy package (e.g., a “SECURE 3.0”) in a future Congress. Highlights include:

• Republican House bills targeting DOL’s audit process and cooperation with plaintiffs’ attorneys. In April 2025, Republican members of the House Education and Workforce Committee introduced legislation requiring DOL to: (1) report on open employee plan audits and explain why any audits open for more than 36 months have not been closed; and (2) provide detailed disclosure and an explanation of the rationale for “adverse assistance” DOL is providing to plaintiffs lawyers targeting plan sponsors and fiduciaries.

• Legislation to undo Biden DOL changes to ESG regulation. On April 24, 2025, Rep. Rick Allen (R-GA), chair of the Subcommittee on Health, Employment, Labor, and Pensions, introduced legislation – the “Protecting Prudent Investment of Retirement Savings Act” – amending ERISA to incorporate (more or less) key provisions of the Trump 1.0 Department of Labor ESG (environmental, social, and governance) investments and proxy voting regulations. In the Senate, on October 30, 2025, Senator Cassidy (R-LA), Chair of the Health, Education, Labor, & Pensions (HELP) Committee, together with Senator Banks (R-IN), (re)introduced similar legislation – the “Restoring Integrity in Fiduciary Duty Act.” This is not bipartisan legislation and is unlikely to become law, but it may reflect (future) changes to the ESG rule that will be considered by DOL itself.

• DB surplus transfer bill. On June 13, 2025, Senators Cassidy (R-LA), Scott (R-SC), Marshall, M.D. (R-KS), and Tillis (R-NC) introduced the Strengthening Benefit Plans Act of 2025, legislation that would allow (1) the transfer of some surplus in a 401(h) account to fund a medical plan for active employees and (2) the transfer of some surplus in a defined benefit plan to a defined contribution plan (to fund, e.g., qualified nonelective contributions under a 401(k) plan) without terminating the DB plan. Because it would raise significant revenue (some estimate as much as $20 Billion over 10 years), this legislation may have some appeal, e.g., as revenue support for a non-retirement spending proposal.

• Age 18 401(k) participation. On May 12, 2025, Senators Cassidy (R-LA), the Chairman of the Senate HELP Committee, and Senator Kaine (D-VA), a member of that committee, reintroduced the Helping Young Americans Save for Retirement Act. The bill would require 401(k) plan sponsors to allow employees as young as 18 to make contributions.

• 403(b) Securities/Banking fix: On May 20, 2025, the House Financial Services Committee voted to favorably report out the “Retirement Fairness for Charities and Educational Institutions Act of 2025,” legislation that would address the remaining obstacles under federal securities laws to the use of collective investment trusts in 403(b) plans.

Agencies

Aronowitz confirmed as EBSA head. On September 18, 2025, the Senate confirmed Daniel Aronowitz as the new head of DOL’s Employee Benefit Security Administration (EBSA).

DOL advisory opinion on lifetime income QDIA. On September 23, 2025, DOL released Advisory Opinion 2025-04A providing guidance as to whether and how the AllianceBernstein’s (AB) Lifetime Income Strategy (LIS), which included a guaranteed lifetime withdrawal benefit (GLWB) annuity as part of a managed account program, could be part of a qualified default investment alternative (QDIA) under DOL’s QDIA regulation. It also provided guidance as to AB’s fiduciary responsibilities with respect to the selection and monitoring of insurers providing guarantees to LIS or a similar program.

DOL withdraws crypto letter. On May 28, 2025, the Trump DOL issued guidance rescinding a prior (Biden) DOL release targeting sponsors who offer crypto investments in 401(k) plans. In the key passage, the 2025 Compliance Assistance Release states:

Prior to the 2022 release, the Department had usually articulated a neutral approach to particular investment types and strategies. Today’s release restores the Department’s historical approach by neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan’s investment menu is appropriate. When evaluating any particular investment type, a plan fiduciary’s decision should consider all relevant facts and circumstances and will “necessarily be context specific.” [Citing the Supreme Court’s decision in Fifth Third Bancorp v. Dudenhoeffer (2014).]

DOL “non-enforcement” policy for transfers of small retirement benefits to state unclaimed property funds. On January 14, 2024, the Department of Labor published a field assistance bulletin (FAB 2025-01) announcing a “non-enforcement” policy with respect to the transfer of small retirement benefits ($1,000 or less) from an ongoing ERISA retirement plan to a state unclaimed property fund, where the plan/plan fiduciaries and the state fund meet certain conditions.

DOL provides guidance on employer fiduciary obligations in PEPs. On July 24, 2025, DOL released a document with respect to pooled employer plans (PEPs) that included a general description of PEPs and how they work, “limited interpretive guidance,” a set of “Fiduciary Tips for Small Employers Selecting a PEP,” and a request for information (RFI) “primarily for the purpose of considering whether additional guidance to facilitate small employers joining PEPs would be helpful.” We provide three articles DOL’s PEP agenda:

• A review of DOL’s thinking/guidance with respect to the fiduciary obligations of employers adopting a PEP

• DOL’s tips for employer-fiduciaries

• DOL’s request for information about what sort of PEP guidance is needed, which provides some clues to where DOL is going with this project.

IRS releases final catch-up contribution regulation. On September 15, 2025, IRS issued a final regulation amending rules for 401(k) catch-up contributions, reflecting changes made by SECURE 2.0, including rules implementing the requirement that catch-up contributions made by certain participants must be made as Roth contributions. The big news was that there would be no further delay: Roth catch-up rules would go into effect in 2026, although for 2026 a good faith interpretation applies. In other respects, the final regulation addresses a number of technical issues dealing with, e.g., “deemed Roth” treatment, correction of mistakes, and the treatment of, e.g., partners, with no W-2 income.

Litigation

Litigation with respect to DOL’s fiduciary advice rule

On November 28, 2025, the Fifth Circuit Court of Appeals dismissed, at DOL’s request, DOL’s appeal of the 2024 decision by United States District Court for the Eastern District of Texas, in Federation of Americans for Consumer Choice v. United States Department of Labor (FACC v. DOL), to stay of the effective date of DOL’s advice fiduciary rule and its related amendment to Prohibited Transaction Exemption 84-24. The case will now go back to the District Court, where it is possible (even likely) that DOL will propose simply withdrawing the regulation, or (as the court indicated) plaintiffs will prevail on the merits.

Issues remain with respect to Prohibited Transaction Exemption 2020-02 Improving Investment Advice for Workers & Retirees, issued in 2020 and subject to litigation in at least two separate district courts. On July 9, 2025, the District Court for the Northern District of Texas issued an order in Federation of Americans for Consumer Choice v. United States Department of Labor, vacating that portion of the DOL’s (re)interpretation (in the preamble to PTE 2020-02) of DOL’s (1975) “five-part test” as it applies to one-time advice with respect to a rollover transaction. But, the court also found that, unlike DOL’s regulation, ERISA itself does not require more than one incident of advice to trigger fiduciary status, and that other problematic elements of DOL’s 2020 reinterpretation of the five-part test – including subjecting the “mutual agreement” and “primary basis” elements to a facts and circumstances analysis – do not conflict with either ERISA or the regulation.

DOL files amicus briefs requesting Supreme Court review of two key ERISA fiduciary decisions and supporting sponsor fiduciaries. The Department of Labor and the US Solicitor General have recently, at the Supreme Court’s request, filed amicus briefs with respect to certiorari petitions in two key ERISA fiduciary prudence cases, Pizarro v. The Home Depot and Johnson v. Parker-Hannifin Corporation (discussed below). In a change of position/prior policy, the briefs support the sponsor fiduciaries, and in Pizarro v. The Home Depot reverses a position taken in earlier amicus briefs to the Court.

Corporate ESG litigation – Spence v. American Airlines. On January 10, 2025, the District Court for the Northern District of Texas, in Spence v. American Airlines, found that American Airlines (AA), as a fiduciary of its two major 401(k) plans, had violated its ERISA fiduciary duty of loyalty in allowing/not monitoring “ESG activism” (principally in proxy voting and “jawboning” management of portfolio companies) by the plans’ largest investment manager, BlackRock, with respect to stock held in plan index funds managed by BlackRock. The court held, however, that AA had not violated its duty of prudence, even though “the evidence revealed ESG investing is not in the best financial interests of a retirement plan,” because ERISA’s fiduciary prudence standard is based on “prevailing industry standards” and AA “did not imprudently deviate from the industry standard.”

On September 30, 2025, the court issued its decision with respect to remedies, granting broad injunctive relief, including significant limitations on the conduct of AA and AA plan fiduciaries and imposing on them extensive disclosure obligations. It did not, however, require AA or AA fiduciaries to pay any monetary damages, finding that plaintiffs had failed to “establish a causal link between the fiduciary breach and actual economic loss [for which] monetary relief may be awarded.”

Forfeiture litigation

We continue getting conflicting litigation on the fiduciary issues in the treatment of forfeitures in a 401(k) plan, although employers are winning the majority of them:

• On June 13, 2025, District Court for the Central District of California dismissed plaintiff’s claim in Daniel J. Wright v. JPMorgan Chase & Co et al., with prejudice. This was another in the line of ERISA fiduciary/forfeiture cases, in which plaintiff alleged that plan fiduciaries violated ERISA’s fiduciary rules by using plan forfeitures to reduce employer contributions rather than using them to reduce (otherwise participant-paid) plan expenses or allocating them to participant accounts.

• On August 12, 2025, the United States District Court for the Western District of North Carolina denied defendant fiduciary’s motion to dismiss in Becerra v. Bank of America Corporation, et al. In this forfeiture case the court, bucking the recent trend, sided with the plaintiff, finding that a claim that the use of committee discretion to allocate forfeitures to reduce employer contributions rather than to pay plan expenses violated ERISA fiduciary rules.

• On July 9, 2025, the Department of Labor filed an amicus brief in plaintiff’s Ninth Circuit appeal of a decision by the United States District Court for the Northern District of California, in Hutchins v. HP Inc. (June 2024), granting defendants’ motion to dismiss. DOL sided with the sponsor, although its argument was very circumstance-specific.

Schlichter firm files broad fiduciary complaint against Empower. On August 15, 2025, plaintiffs’ law firm Schlichter Bogard LLC, filed a lawsuit on behalf of their clients against Empower, Williams-Linzey, et al. v. Empower Advisory Group, LLC; Empower Retirement, LLC; Empower Financial Services, Inc.; and Empower Annuity Insurance Company of America. Plaintiffs’ complaint claims that Empower violated ERSIA fiduciary provisions by improperly using confidential participant data from plans for which it was the recordkeeper to target participants with large account balances nearing retirement age, encouraging those participants to roll their money into its “high-fee laden ‘Managed Account’ [IRA] program.” The complaint raises a number of novel issues:

• This is a suit against the provider, not (as is nearly always the case in fiduciary litigation) the plan sponsor.

• The complaint alleges that Empower – which functioned primarily as plan recordkeeper (an administrative, not a fiduciary function) – was nevertheless a fiduciary.

• The bases for the claim that Empower was a fiduciary are that:

  • It “appropriated” discretionary fiduciary authority when it improperly used participant confidential information to “cross sell” its managed account IRA product to plan participants.

  • Its “one-shot” rollover advice triggered ERISA advice fiduciary status.

Multiemployer plan withdrawal liability litigation

Supreme Court grants certiorari in multiemployer withdrawal liability case. On June 30, 2025, the Supreme Court granted certiorari in (agreed to review) M & K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund – a case involving the validity of calculating multiemployer plan withdrawal liability based on a valuation interest rate adopted after the end of the “measurement” plan year. While the issue in this case is somewhat narrow, multiemployer plans and withdrawing employers have for some time been dueling over what interest rate should be used to calculate withdrawal liability, with (often) millions of dollars at stake, and a Supreme Court opinion may clear up one key issue.

Sixth Circuit upholds decision rejecting multiemployer plan actuary’s use of lower withdrawal valuation interest rate. On August 6, 2025, the Sixth Circuit Court of Appeals upheld the lower court’s decision in Ace-Saginaw Paving Company v. Operating Engineers Local 324 Pension Fund, holding that, in making a determination of multiemployer plan withdrawal liability, the plan’s actuary may not consider “policy issues” – in this case, choosing an (exceptionally low) interest rate solely for purposes of withdrawal liability calculations “that gave the remaining employers a lower chance of getting stuck having to pay extra in the future” – in making his “best estimate” of the current value of the plan’s unfunded vested benefits. Of note is that the Court did not opine on what a proper interest rate would be, but instructed that the actuary must use a rate that complies with ERISA.

Other cases of note …

Sixth Circuit, in decision for plaintiffs, uses generic S&P TDF benchmark to determine underperformance/imprudence. On November 20, 2024, the Sixth Circuit Court of Appeals, in Johnson, et al. v. Parker-Hannifin Corporation, et al., reversed and remanded a decision by the lower court dismissing plaintiffs’ claims “that Parker-Hannifin breached its fiduciary duties by imprudently retaining the Northern Trust Focus Funds, imprudently providing participants with higher-cost shares, and failing to monitor its agents in their fiduciary duties.” The Sixth Circuit’s decision included a finding that plaintiffs had adequately alleged that defendants had imprudently retained a suite of target date funds (the Northern Trust Focus Funds) in the 401(k) plan’s fund menu, based in part on the alleged underperformance of those funds relative to the “S&P target date fund benchmark.”

Virginia district court dismisses suit challenging use of managed account as a default investment. On January 10, 2025, the United States District Court for the Eastern District of Virginia, in Hanigan v. Bechtel, dismissed plaintiff’s claim that, in using a managed account as the plan’s qualified default investment alternative (“QDIA”), the sponsor fiduciary had violated ERISA’s fiduciary prudence standard.

Court in Natixis litigation provides a practical discussion of what constitutes a prudent fiduciary committee process. On June 26, 2025, the United States District Court District of Massachusetts issued a decision in Waldner v. Natixis Investment Managers, L.P., et al., holding, after a full trial, for defendants “on all counts.” The courts decision provides a useful articulation of what constitutes a “prudent process.”

Plaintiffs’ lawyers target stable value fund. On November 6, 2025, participants in the Mitchell International, Inc. 401(k) Savings Plan filed suit in the District Court for the Southern District of California, claiming that sponsor-fiduciaries had violated ERISA’s fiduciary prudence rule “by selecting and/or maintaining a certain guaranteed investment fund with lower crediting rates when compared to available similar or identical investments with higher crediting rates.”

* * *

In 2026 we expect to be following developments with respect to (nearly) all of these issues.