Data & Research May 14, 2024

John Hancock Starts Five-Year Longevity Research Project With MIT

The retirement and insurance provider is dedicating millions in funding for a collaboration that will include a longevity preparedness index.

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John Hancock and its parent company Manulife announced Tuesday a multimillion-dollar, five-year research partnership with the Massachusetts Institute of Technology’s AgeLab for projects including the creation of a Longevity Preparedness Index.

Through the partnership, John Hancock and Manulife will collaborate with the university on research, thought leadership and workshops focused on addressing the challenges longevity brings to quality of life and income needs. Researchers will also have access to John Hancock’s customer-base data to support findings, according to the organizations.

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The index, a pillar of the collaboration, is being prepared to launch in early 2025 and will measure Americans’ readiness to live longer lives in the coming years and decades. The research will also look to provide insights into how people can maximize financial planning, health and wellness habits, work and retirement transition planning, housing choices and end-of-life planning.

Wayne Park

“We are excited by this collaboration and anticipate that the learnings will inform how we can better help participants, sponsors, advisers and TPAs so that more Americans are prepared to live better—as well as longer and healthier—lives in retirement,” says Wayne Park, head of John Hancock’s U.S. retirement division.

Park added that the findings are intended to be useful for policymakers and relevant private and public organizations.

The organizations declined to provide the exact amount of funding.

Longevity is a focus for many financial organizations as well as nonprofits as a growing number of people will be faced with supporting themselves and family members for longer periods of time. In the announcement, John Hancock cites World Economic Forum data estimating that, by 2050, the number of people aged over 60 is expected to double to 2.1 billion, with one-fifth of an individual’s life also now expected to be lived with morbidity or in a state of illness.

The research will be led by MIT AgeLab Founder and Director Joseph Coughlin, author of the book “The Longevity Economy,” along with social and data scientists and experts outside of MIT. The group will also hold workshops on topics including “activations around longevity, generational dynamics, new technology, and behavioral insurance.”

“We want not only to identify the many different dimensions of what it takes to live longer, better; but also to measure the preparedness of a nation to live 100 good years,” Coughlin said in a statement. “It is our shared objective that our work will educate and motivate people to do what it takes for themselves, their families, and their communities—to turn a longer life into a better life for all.”

John Hancock sells financial products, including life insurance and annuities, along with retirement plans and services for institutions and individuals.

The firm announced a reorganization in February to combine its sales and services divisions—a move it made a little under one year from when Park took over as CEO.

Compliance May 13, 2024

AT&T Fee Lawsuit Could Reach Supreme Court Next Year

Industry groups asked the Supreme Court to resolve an ERISA-related appeals court split.

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The ERISA Industry Committee, the American Benefits Council, the SPARK Institute, and the Committee of Investment of Employee Benefit Assets filed an amicus brief with the Supreme Court on May 9 asking the high court to hear an appeal on behalf of AT&T in the case Bugielski et al. v. AT&T.

AT&T was initially sued in 2017 for a breach of fiduciary duty when it amended contracts to add brokerage and investment advisory services offered by Fidelity Investments for their participants in 2012 and 2014, respectively. The plaintiffs alleged that AT&T did not evaluate or disclose the compensation paid to Fidelity when it added these services. The complaint added that the fees were a prohibited transaction, did not comply with the terms of any exemption and that the plan sponsor had not followed a prudent process.

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The district court initially ruled in favor of AT&T and said the compensation Fidelity received was third-party compensation and the plan itself was not a party, and therefore, AT&T was not required to evaluate and disclose it.

The U.S. Ninth Circuit Court of Appeals disagreed and remanded the case back to the district court for further proceedings in October 2022. The appeals court ruled that amending the contracts had been prohibited transactions because they added optional advisory and brokerage services to the plan paid by participant fees. The appeals court ordered the district court to start with that assumption and then decide if an exemption applies to the transactions.

ERIC and the other retirement and benefits groups argue that the 9th Circuit’s ruling would make any contract modification or renegotiation presumptively prohibited, which in turn would result in a “flood of litigation” against plan sponsors that would not be subject to a motion to dismiss. They argue that Congress did not intend routine contract renewals to be prohibited transactions under the Employee Retirement Income Security Act.

The appellants added that such an increase in litigation would increase already staggering insurance costs on the part of plan sponsors.

Tom Christina, executive director of the ERIC Legal Center, said in a statement that “Under the Ninth Circuit’s interpretation of Section 406 of ERISA, a plaintiff could sue a plan fiduciary for the routine renewal of its contract with its recordkeeper.” He added, “Based on the Ninth Circuit’s decision, a complaint alleging nothing more than that would survive a motion to dismiss and become an expensive burden for the employer.”

ERIC’s brief added that the Supreme Court, by taking this case, could help resolve a complicated split on these issues among several courts of appeals.

If the Supreme Court decides to hear the case, it would likely be heard in the 2025 term and ruled upon by June 2025.

 

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