It was a very interesting and somewhat esoteric week in the media when it comes to insurance and ERISA, with a lot of good reading on withdrawal liability, the Department of Labor regulation on alternative investments in retirement plans and the rising scrutiny faced by the fiduciaries of health plans.

  1. Last week, I discussed a new Supreme Court decision on withdrawal liability, noting that the nature of the remedy and the size of many union plans inevitably makes the cases significant in value – which of course, in the legal world, tends to lead to litigation. I am making light – only a little – of the importance of this issue, but the fact is that for any employer considering eliminating its use of union labor, it is not a laughing matter in anyway. I have represented small and large employers confronting this issue, and the liability risk to both is significant relative to the size of the business. This article does an excellent job of explaining the real risks, what they are and how they apply.
  2. I have written more than a few times of my concerns about how plan fiduciaries will have to conduct themselves in light of the new proposed Department of Labor regulations on evaluating assets, including alternative assets. So I greatly enjoyed this article discussing a report from Morningstar evaluating the inclusion of annuity options in target date funds in light of the proposed regulation. I can’t say it makes it look to me like the task for fiduciaries will be easy. And maybe it shouldn’t be. Maybe at the end of the day part of the goal of the regulation is not just to open the doors of plans to such assets, but to impose some discipline on fiduciaries with regard to every type of asset in the plan, including alts.
  3. I might be a little late to this one, but this white paper on private credit and its role in insurance and with regard to 401(k) plans is outstanding. Here’s the thing, though, speaking of the Department of Labor’s proposed new regulation. There is simply no way that the run of the mill plan sponsor or fiduciary can fairly evaluate private credit investments at this level of detail, and it’s not clear to me how many will actually be able to access truly independent and nonconflicted outside advisors who can actually advise them on the issue. I have trouble seeing them being compliant with the new alts reg as a result.
  4. It’s a new world for health plan fiduciaries and there’s a new sheriff in town when it comes to health plans – you pick your favorite cliche and add it in. This great story from Hall Benefits Law does a nice job of summing up how EBSA has turned its focus to health benefits and away from retirement plans, with the result that health plan sponsors and fiduciaries are facing increased scrutiny of their handling of plans.
  5. Yes, I know they have a vested interest in the issue, but this article from T.RowePrice makes a pretty persuasive argument – even to a skeptic of the idea like me – for adding alts to 401(k) plans. I think what makes the article persuasive is that it acknowledges the drawbacks to the idea and the difficulties in overcoming them.