401k World: The Litigators
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Insight: Studies, Research, Analysis, and Papers The era of plan litigation began, from the plaintiffs' view, seeking to protect workers from retirement plan negligence. From the position of many plan fiduciaries and their defense attorneys, the trend has spurred a host of copy-cat complaints aiming to wring settlements from large plan sponsors and providers. Whichever side is more accurate at any given moment -- or if it's some combination of both -- one thing is certain: DC litigation remains relatively robust. This PLANADVISER In-Depth story considers 401k litigation's present and future. Source: Planadviser.com Plan Sponsor Attitudes Toward Retirement Plan Management and Fiduciary Outsourcing This 18-page study measured how retirement plan sponsors view 3(16) fiduciary outsourcing as a tool to help them better manage their retirement plans. It also captured plan sponsor perspectives on how such outsourcing can help drive improved plan outcomes. The study was conducted in January 2024. Source: Pentegra.com Demand for Increased Personalization Could Come from Younger 401k Participants The momentum behind personalized retirement outcomes may come from younger generations. According to Cerulli, younger 401k participants have a greater willingness to share personal data regarding health and balance sheet information. Asset managers and recordkeepers should pay closer attention to younger 401k participants and engage them by offering more personalized solutions. Source: Cerulli.com Access to 401ks Surges Past 70 Million in 2023: Capitalize According to the firm Capitalize, the number of private sector workers in the U.S. with access to 401k plans surged 6.35% in 2023 to reach more than 71.5 million individuals, or nearly 6 in 10 U.S. workers for the first time. Source: 401kspecialistmag.com Record Number of Participants Raised Deferral Rate in 2023, Vanguard Reports In 2023, a record-breaking 43% of participants raised their rate of salary deferral into retirement savings, marking the highest level observed by the Vanguard Group since tracking began, according to a preview released Monday of the recordkeeper and asset manager's "How America Saves" report. Source: Planadviser.com Americans Want Retirement Investment Advice to Be in Their Best Interest: Survey A new survey commissioned by the CFP Board reveals that nearly 97% of Americans agree that the financial professional who provides one-time recommendations or other one-time advice about retirement investments should be required to act in their client's best interest. This includes a recommendation to roll over funds from a workplace retirement savings program into an IRA or an annuity. Source: Prnewswire.com »» Click here for More Studies, Research, and White Papers Fiduciary and Plan Governance Don't Set It and Forget It: Keeping up Your Fiduciary Committee It's a perfect time to think about an issue that might get lost in the summertime and year-end shuffles: fiduciary committees. Having a committee isn't a set-it-and-forget-it situation, it requires regular action to ensure the committee is properly undertaking its role as a plan fiduciary. Here are some best practice items committees should consider annually. Source: Benefitslawadvisor.com »» Click here for more Fiduciary and Plan Governance Material Items of Special Interest to Advisers and Other Service Providers For retirement plan recordkeepers, the past few years have marked a significant transformation, set in motion by the dual forces of consolidation and the unyielding quest for innovation and scale. As the number of recordkeepers dwindles, those that remain are redefining what it means to be a recordkeeper in today's market. Source: Captrust.com Slide Deck From Presentation on the DOL's Fiduciary Rule: The Impact on Recommendations of Annuities Faegre Drinker discusses the DOL's proposed fiduciary regulation and its amendments to Prohibited Transaction Exemptions 84-24 and 2020-02 and their anticipated impact on annuity sales. These proposed rules, to be finalized this year, will impose significant requirements on recommendations of annuities to retirement investors -- ERISA and tax-qualified private-sector retirement plans, participants and IRA owners -- including recommendations for rollovers and transfers. Source: Faegredrinker.com The American Airlines ESG Fiduciary Case Exposed the Problem With Mandated Proxy Voting On January 31, 2003, the SEC adopted Rule 206(4)-6(c) under its Rules and Regulations of the Investment Advisers Act of 1940. Since that time, it has revised that rule to account for some concerns that arose out of the original regulations. The question is whether they've addressed the real problem. Source: Fiduciarynews.com Court and Legal In March 2022, the prolific Capozzi law firm sued the jumbo Hy-Vee, Inc. defined contribution plan for excessive recordkeeping fees. The lawsuit was brought with false pretenses of alleged fiduciary malpractice based on misleading circumstantial evidence and false facts to survive a motion to dismiss. The Hy-Vee case is worth studying to understand the prejudicial effect of allowing the trial bar to serve as America's fiduciary regulator of plan fees and investment performance. Source: Encorefiduciary.com Plaintiffs Request Judge Approve Settlement in ERISA Data Breach Lawsuit Retirement plan participants whose personal identifiable information was exposed in a 2021 data breach have asked a Georgia federal judge to approve an $8.733 million agreement to resolve allegations, which claimed national consultant Horizon Actuarial Services LLC failed to safeguard their sensitive data. Source: Plansponsor.com Yale University Challenges Appeal in 403b Excessive Fee Suit In a lengthy filing (109 pages), Yale University says the plaintiffs who lost their excessive fee case in a jury trial shouldn't get a "do-over." More specifically, the Yale fiduciary defendants in that case have filed the aforementioned brief stating that the Second Circuit need not concern itself with entertaining an appeal of that judgment, the first (and to date only) jury trial in this genre of cases. Source: Napa-net.org »» Click here for more Court and Other Legal Issues MEPs and PEPs In PEPs, Attaining Economy of Scale Is Critical, Sometimes Illusive Retirement plans that include multiple employers have continued to grow in assets, but the growth of assets necessary to reach the critical size where economies of scale can be achieved may take years. The forecasted cost savings to plan sponsors of joining a pooled employer plan over using a single employer plan may not materialize, depending on the sponsor's pooled plan provider. Source: Plansponsor.com A Primer on MEPs, PEPs and GoPs The SECURE Act 1.0 enacted at the end of 2019 established new retirement plan types, including Pooled Employer Plans and Defined Contribution Group of Plans. It also ratified the existence of "open" Multiple Employer Plans, which had been used by many service providers without formalized reporting requirements. The goal of these changes was to expand retirement coverage to more workers across the U.S. This is a primer on these plan types. Source: Newfront.com »» Click here for More MEP and PEP Material Cyber and Plan Security Is Your Plan Cyber-Secure? Fiduciaries and Vendors Face Ongoing Challenges No steps will ever provide 100% protection against breaches, but in this article, attorney Carol Buckmann discusses the state of the law, court cases in which participants have sued to get stolen benefits restored, and practical steps that can be taken by the company's fiduciaries to better protect participants and lower the risk of loss. Source: Cohenbuckmann.com »» Click here for more on Cybersecurity Issues Marketplace News The Standard Expands Personalized Managed Account Solutions for Workplace Retirement Plans Modern Wealth Adds $1.2B Retirement Plan Advisory 2024 PLANADVISER Retirement Plan Adviser of the Year Finalists
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