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Our Perspective

How HR and finance can work together to fix the retirement crisis

We have a retirement crisis in the U.S. that I am not convinced financial-wellness initiatives can solve for all corporations. I’m not going to just say it, I’m going to prove it. And, to do that, I am going to start off with a story. I had two questions for the group I chose to…Read More

April 2023 Annuity Purchase Update

Despite the estimated 30 point drop in average annuity purchase rates, moderate stock market returns cushioned the dip in funding status maintaining an active Pension Risk Transfer market.

DOL files motion/brief opposing preliminary injunction in ESG litigation

On February 21, 2023, plaintiffs in Utah v. Walsh (AKA the ESG lawsuit) filed a motion for a preliminary injunction of the Department of Labor’s ESG/proxy voting rule. On March 28, 2023, the Department of Labor filed its motion in opposition. In this article, after providing background, we briefly discuss parts of this proceeding that may be relevant to the interpretation of DOL’s ESG rule or ongoing litigation in this case or that may come up in other ERISA litigation.

Summary of Biden Administration changes to Trump ESG/Proxy Voting Rules

The following is a brief summary of the main changes made by the Biden Department of Labor to the Trump Department of Labor ESG/Proxy Voting Rules. ESG – With respect to the fiduciary duty prudence: Changed the 2020 rule’s “pecuniary/non-pecuniary” terminology to “risk-return” terminology: “[A] fiduciary’s determination with respect to an investment … must be…Read More

Pension Finance Update March 2023

In January 2022, in Hughes v. Northwestern, the Supreme Court vacated a 2020 Seventh Circuit decision for defendants in an ERISA fee case, remanding the case to the Seventh Circuit for further consideration. On March 23, 2023, the Seventh Circuit handed down its decision in this litigation, siding with plaintiffs on the issues of recordkeeping fees and the selection of retail share classes. Most significantly, the court articulated a set of rules for consideration of these cases that could prove useful both for plaintiffs bringing lawsuits and for plan fiduciaries wishing to avoid being sued.
In this article, we begin with a brief summary of the background on this case and then review the court’s theory of how motions to dismiss in ERISA prudence litigation involving participant-directed individual account plans (like, e.g., 401(k) plans) should be handled and discuss the court’s decision with respect to the two issues the plaintiffs won on – recordkeeping fees and the use of retail share classes.

De-risking in 2023, Part 1

In this article we provide analysis of a specific de-risking issue for 2023: how higher 2022 interest rates may affect sponsor decisions to de-risk (or not de-risk) defined benefit plan liabilities via a lump sum window in 2023. In a follow on article we will consider how the decision to settle lump sums in 2023 affects ongoing plan finance (balance sheet, income statement, overhead, and cash flow).

Retirement proposals in the Administration’s FY2024 budget

On March 9, 2023, the Administration released its Fiscal Year 2024 Budget. The related General Explanations of the Administration’s Fiscal Year 2024 Revenue Proposals included a description of “modifications to rules relating to retirement plans” consistent with, for the most part, proposals that were, at one point, part of the Administration’s 2021 “Build Back Better” proposal. In this note, we very briefly review two of the Administration’s proposals: a $10-$20 million cap on account-based accumulations, and the elimination of certain “Roth conversions,” for certain high-income taxpayers.