The Ninth Circuit Court of Appeals recently addressed several issues of first impression in Bafford v. Northrop Grumman (9th Cir. April 15, 2021), a lawsuit involving retirees who received vastly overstated pension benefit estimates from the plan’s recordkeeper reminds employers of the importance of careful administration. The case highlights the need to ensure that electronic recordkeeping systems and tools align with the plan terms. Participant requests for plan or benefit information using online portals or other electronic means still demand timely and accurate responses as required by ERISA’s disclosure requirements.
On appeal from the district court, the Ninth Circuit agreed that the participants’ ERISA fiduciary claims should have been dismissed, aligning with the First and the Fourth Circuit’s view that a named fiduciary is only liable for a fiduciary breach if they are performing a fiduciary function. The court said that calculating pension benefits using a pre-set formula is a ministerial function, not a fiduciary function. So a miscalculation error would not create a breach of fiduciary duty claim.
Author(s): Craig A. Day, Suzanne G. Odom
Publication Date: 25 April 2021
Publication Site: The National Law Review
The mega-merger reflects the rapid consolidation of Australia’s A$3 trillion pension industry after a 2018 inquiry found fees charged by some managers were unjustified and eroded workers’ savings, and that many funds were not putting customers’ interests ahead of their own.
The government has since made it mandatory for funds to put member interests first, triggering a wave of mergers as fund boards determine that scaling up results in a better deal for people’s savings.
“The due diligence process we have undertaken demonstrates a strong business case for merging with achievable efficiencies and savings,” said QSuper Chair Don Luke and Sunsuper Chair Andrew Fraser in a statement.
Author(s): Reuters staff
Publication Date: 15 March 2021
Publication Site: Reuters
The Labor Department issued a rule in October, during the Trump administration, that experts say would curb use of ESG funds in 401(k) plans.
Money managers and other stakeholders are pushing the Biden administration to scrap the rule or agree not to enforce it, according to a report in The Wall Street Journal.
Investor demand for ESG funds has grown significantly. 401(k) plans represent a big untapped growth source.
Author(s): Greg Iacurci
Publication Date: 4 March 2021
Publication Site: CNBC
Money managers are lobbying to scrap a Trump-era rule that makes it difficult for 401(k) plans to invest in socially focused funds.
The Labor Department rule, announced in October, imposed restrictions on what can and can’t be offered as company 401(k) funds. One result is that plans can’t use funds with nonfinancial goals as default investments for employees.
That means 401(k) overseers and managers need to show that environmental, social and governance strategies can boost financial returns—a challenge for the nascent industry. ESG-focused funds are a growing profit center for asset managers.
Lobbyists representing managers, pensions and retirees began making calls to the Biden transition team in the weeks after the rule was announced. Some lobbyists urged the incoming administration to agree not to enforce the rule and place it under review, said people familiar with the matter.
Author(s): Dawn Lim
Publication Date: 2 March 2021
Publication Site: Wall Street Journal
Nearly two dozen fiduciaries of public retirement plans and others expressed concern over BlackRock’s internal practices and stewardship stances on companies’ political spending and lobbying activity.
Author: Hazel Bradford
Publication Date: 26 January 2021
Publication Site: Pensions & Investments
The Biden administration will review a recent Department of Labor rule stipulating that ERISA plan fiduciaries cannot invest in “non-pecuniary” vehicles that sacrifice investment returns or take on additional risk.
Author: Brian Croce
Publication Date: 21 January 2021
Publication Site: Pensions & Investments