BENEFITS DIGEST

The stable value litigation wave picked up another survivor last Wednesday, in a ruling that teaches two lessons at once. A former Penn State Health employee had signed a severance release, and the court enforced it, dismissing his individual and class claims. But a release cannot waive claims brought on a plan's own behalf, so his derivative claims proceed. Those claims allege the fiduciaries kept an underperforming Great-West guaranteed investment contract while paying the same insurer recordkeeping fees 224% higher than average, and let forfeitures offset nearly twelve million dollars of the employer's own contributions without accounting for the conflict of interest. That loyalty theory survived where other forfeiture suits keep failing because it attacks the self-interested exercise of discretion, not the practice itself. The court also rejected an industry amicus attack on the complaint's comparator funds, holding that perfect comparators are not required at the pleading stage.

Since the beginning of 2025, more than two dozen putative class actions have been filed challenging the stable value funds offered in retirement plans, on complaints that follow a common template. The suits allege the selected fund credited lower returns than available alternatives and ask courts to infer a flawed fiduciary process from the performance gap. Trucker Huss recommends benchmarking against structurally comparable products, periodic market testing, and documentation of the tradeoff between yield and principal protection.

The ERISA consultants at the Retirement Learning Center address a question about liquidating a stable value investment in a client's 401(k) plan, and the market value adjustment and fiduciary liability issues the move can trigger.

A federal judge has granted a motion to dismiss a stable value suit, because the plaintiffs “have failed to state any of their claims.” And not for the first time, apparently.