On September 12, 2022, the Department of Labor filed a motion to dismiss in ForUsAll, Inc. v. Walsh, a lawsuit by a 401(k) service provider challenging DOL’s March 10, 2022, “Compliance Assistance Release” (the “Release”) generally cautioning against 401(k) plans including “cryptocurrencies” (and other “digital assets” including “tokens,” “coins,” “crypto assets,” and “derivatives thereof”) in a 401(k) plan fund menu or brokerage window.
Average Annuity Purchase interest rates skyrocket marking the highest observed rates in the last decade.
On September 7, 2022, the Third Circuit handed down its decision in Perrone v. Johnson & Johnson, a stock drop case in which plaintiffs claim (among other things) that sponsor fiduciaries should have disclosed (alleged) “inside information” about risks with respect to J&J’s Baby Powder.
Pension finances were mixed during August, as higher interest rates offset the impact of falling stock markets. Both model plans1 we track were close to even last month: Plan A improved less than 1% and is now up almost 5% for the year, while the more conservative Plan B lost a fraction of 1% in August and is now down 1% through the first eight months of 2022:
Defined benefit plan sponsors that (1) are currently using the alternative (24-month average) method to determine unfunded vested benefits (UVBs) for purposes of calculating Pension Benefit Guaranty Corporation variable-rate premiums, and who (2) have the ability to elect to switch to the standard (spot-rate) method, may want to consider electing to switch to the standard method for 2022 (that election generally must be made (for a calendar plan) by October 15, 2022). While that election will generally not have a significant effect on 2022 variable-rate premiums, it is likely that it will (because of 2022 interest rate increases) reduce 2023 premiums significantly. And there are some “pros and cons” to making that election this year.
On August 12, 2022, the Seventh Circuit Court of Appeals upheld a decision by a lower court in Walsh v. Alight Solutions LLC enforcing (with modifications) an administrative subpoena by the Department of Labor against Alight. The subpoena requires Alight to produce documents in connection with alleged cybersecurity breaches at Alight with respect to the retirement and health plans for which it provides recordkeeping services.
Pension Risk Transfer market activity was vigorous thus far in 2022, with a 71% surge in total premium compared to the first half of 2021.
Recently, participants and former participants in some of the largest 401(k) plans in the US have sued plan fiduciaries claiming that the use of one of the largest target date funds, the BlackRock LifePath Funds, was imprudent, because those funds “underperformed” alleged “comparators.”
These sorts of fiduciary imprudence/TDF underperformance claims have emerged as a second major line of attack (after the attack on fund and recordkeeping fees that began in the early 2000s) by plaintiffs lawyers on 401(k) plan fiduciaries.
Pension finance enjoyed a strong month in July due to rising stock markets. Both model plans1 we track gained ground last month: Plan A improved almost 2% and is now up 4% for the year, while the more conservative Plan B added 1% and is now down less than 1% through the first seven months of 2022:
In this article we discuss a July 22, 2022, decision by the same court, in favor of plaintiffs and denying defendants’ motion to dismiss, holding that a claim based on the use of a retail share class, rather than a less-expensive institutional share class, was sufficient to survive a motion to dismiss.