The US Supreme Court has agreed to hear arguments in a lawsuit against US technology company Intel that could shape how retirement plan participants sue fiduciaries over the use of alternative investments.
Last week, the court confirmed it will consider an appeal centred on whether people suing 401(k) plan fiduciaries must identify a “meaningful benchmark” at the outset when challenging investments in alternative assets.
The decision follows the latest appeal in Anderson v. Intel Corp. Investment Policy Committee, a case first filed in 2019. The lawsuit was brought by former Intel employees and alleged that the fiduciaries of the Intel 401(k) Savings Plan breached their duties by allocating retirement assets to illiquid alternative investments, including hedge funds.
A federal appeals court previously dismissed the claims, finding that the plaintiff failed to plausibly allege a violation of the Employee Retirement Income Security Act (ERISA). The court ruled that the complaint did not provide a “meaningful benchmark” against which to compare the Intel funds in order to show that plan fiduciaries acted imprudently.
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The latest appeal challenges the use of the “meaningful benchmark” standard under ERISA, with a Supreme Court ruling expected to clarify how much proof retirement plan participants must provide at the start of a lawsuit when contesting the inclusion of alternative investments in 401(k) plans.
A decision that weakens the benchmark requirement could increase litigation risk for private market strategies included in defined contribution retirement plans.
The case comes as alternative asset managers seek greater access to the US 401(k) market, following an executive order signed by President Donald Trump allowing private market investments to be included in retirement plans.
Last week, Blackstone partnered with US retirement plan administrator Empower, underscoring the industry’s push to expand the presence of alternative assets in 401(k) pension schemes.
