Over the last couple of years, more than 150 lawsuits have been filed by employees claiming that their employer's pension plans include poor investment options, charge excessive fees, or otherwise violate fiduciary obligations in prudent management of retirement plans under ERISA. Plan fiduciaries have attempted to defend these cases by arguing that they offer an array of investment options, and that the plan should not be liable for offering poor performing or expensive funds if the plan also offers prudent, inexpensive options. In a unanimous ruling in January, however, the U.S. Supreme Court ruled that plan fiduciaries must conduct their own independent evaluation to determine which investments may be prudently included in a plan's menu of options. "If the fiduciaries fail to remove an imprudent investment from the plan within a reasonable time, they breach their duty," Justice Sotomayor said in the Court's opinion. Hughes v. Northwestern University, No. 19-1401, 1/24/22. Justice Sotomayer did say: "The courts must give due regard to the range and reasonable judgments a fiduciary may make based on her experience and expertise."
This is part of our April 2022 Newsletter.
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