DC Plans Involved in 63% of 2025 ERISA Litigation

Justin Bove

Last year saw a near-record 155 fiduciary class lawsuits filed by plaintiffs’ firms alleging violations of the Employee Retirement Income Security Act and breaches of fiduciary duty. With the help of the Dorsey & Whitney law firm, Encore Fiduciary—an insurer of fiduciary liability insurance for employee benefit plans—tracked these lawsuits and found that companies sponsoring ERISA plans continue to be targeted by plaintiff firms.

This first half of our analysis focuses on litigation against defined contribution plans and other retirement plans. The second half will focus on health plan litigation.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news. 

What We Found

ERISA Class Litigation by Plan Type

Defined Contribution Plans

98

Defined Benefit Plans

2

Health Plans

35

ESOPs

14

Other

1

Defined contribution plans remained the most frequent target in these cases, named in 63% of last year’s ERISA class action litigation. As in prior years, most lawsuits alleged excessive recordkeeping and/or investment fees. Many lawsuits claimed plan fees could have been reduced by the application of forfeitures to offset administrative expenses. Lawsuits that alleged the inclusion of imprudent investments shifted focus from the suite of target-date funds—typically the plan’s qualified default investment alternative—to stable value funds.

Health care plans were the second-largest category of last year’s ERISA litigation, at 25%, and employee stock ownership plans represented 9% of defendants.

ERISA Fee, Investment Lawsuits on the Rise

Since 2016, 606 excessive fee and imprudent investment lawsuits have been filed against ERISA defined contribution plans, not counting employee stock ownership plans, which were tracked separately.

In 2025, there were 94 lawsuits, third in that period behind 2020 (a record 102 lawsuits) and 2022 (90 lawsuits). Five of the last six years saw lawsuit totals greater than the overall annual average of 60 cases per year for the past decade.

Excessive Fee Lawsuits Target Large Plans

Last year also had 74 excessive fee lawsuits, a 64% increase from 45 such lawsuits in 2024. Individually or in some combination, the suits alleged that plan recordkeeping fees or investment fees were too high; plan forfeitures should have been used to offset plan expenses instead of offsetting future employer contributions; and/or plan investment performance was worse than alternative options.

Both recordkeeping fees and investment fees have declined during the past 10 years, yet during that same time, lawsuits alleging excessive fees have increased significantly. Encore’s Large Plan Recordkeeping Benchmark Study and NEPC LLC’s 20th annual DC Plan Trends Survey found that recordkeeping fees for large plans are already low. More recently, the 25^th Edition of the 401k Averages Book confirmed “a continuation of a long-running industry trend: both investment and recordkeeping fees are steadily declining,” and that “average investment-related fees decreased across all plan sizes … reinforcing the long-term trend toward lower participant costs.”

According to the BrightScope/ICI Defined Contribution Plan Profile published in March 2025, there were more than 1,500 401(k) plans classified as “large”—having at least $500 million in plan assets in fiscal 2022. Factoring in room for plan asset growth over the last three years and hedging that some of the 606 lawsuits over this period have targeted some plans more than once, it is still a conservative estimate that close to 25% of large plans have been sued in the past decade. This number is astronomically high when considering the intended purpose of ERISA—a law of process, not outcome. In our opinion, Monday morning quarterbacking should not be permitted by the courts.

Given that fewer than 3% of DC plans are considered large plans, it is interesting to highlight that almost all the lawsuit activity within the last 10 years has targeted this small share of the plan universe. It is even more interesting when considering that large plans have significantly lower fees than small plans, as evidenced by the 401k Averages Book. Plaintiff firms can leverage higher settlements from larger plans, which seems to be why they continue to target them, rather than smaller plans.

Will DOL Amicus Brief Counter Forfeiture Cases?

Lawsuits related to forfeitures—unvested portions of employer-contributed amounts that an employee leaves behind when they leave the company without meeting the plan’s vesting requirements—also increased, with 48 cases filed last year, compared with 29 in 2024. Plaintiffs have alleged that forfeitures should be used to offset plan administrative fees, including those charged to individual accounts, rather than the standard industry practice of using unvested employer contributions to reduce future company matching contributions owed to a plan.

While most courts have granted early motions to dismiss these cases, most dismissed cases were appealed, pushing appellate courts to again scrutinize these allegations. Notably, the U.S. Department of Labor submitted an amicus brief in Hutchins v. HP that sided with the defendant and cited how a ruling in favor of the plaintiffs could ultimately harm plan participants.

The DOL’s amicus brief seemingly did not faze plaintiff firms, which filed 21 of the 48 lawsuits with forfeiture allegations following the amicus brief and subsequently obtained a settlement of nearly $10 million in Singh v. Capital One Financial Corporation. While the DOL’s position is a welcome development for plan sponsors and fiduciary insurers, its ultimate impact remains unclear until the appellate court issues its ruling.

Challenges to Stable Value Funds

Allegations of imprudent investments remained high, with 53 lawsuits filed in 2025, compared with 48 in 2024. Plaintiff firms were shifting their focus from actively managed target-date funds, which are more expensive than passive index target-date funds, to stable value funds. In total, 27 lawsuits were filed challenging the inclusion of stable value funds on plan investment menus, alleging they had crediting rates lower than other alternative fixed-income investments available in the market. These lawsuits are still making their way through the courts, making it difficult to predict how successful these suits will ultimately be.

‘Safe Harbor’ for Alternative Assets?

President Donald Trump’s executive order directing agencies to make it easier for DC plans to include alternative assets in retirement plans, signed on August 7, 2025, provided 180 days for the DOL and other federal agencies to provide such guidance, including the potential to establish a safe harbor to protect plan sponsors from “litigation risk.” As of mid-February, it was unclear what this guidance may be.

It is also uncertain whether any potential regulatory safe harbor could curb litigation. Plaintiff firms have sued retirement plans with remarkable success over the past 10 years and are likely eager to sue retirement plans that replace transparent, low-cost investments with less transparent, higher-cost investments as part of any evolving investment strategy.

PRT Litigation Slows Down

Since the beginning of 2014, 13 class lawsuits were filed against employers who had previously transferred assets and liabilities from their pension plans to purchase a group annuity contract from an insurance company through a pension risk transfer transaction. Only one lawsuit was filed in 2025. Plaintiff firms alleged that when offloading pension obligations to private insurance companies, defined benefit plan sponsors violated ERISA by not selecting the “safest available annuity” for retirees.

Of the 13 PRT lawsuits filed to-date, 11 targeted insurer Athene, and two targeted insurer Prudential. Ten lawsuits remain from the original 13 filed, since three pairs were filed against the same defendants.

Four out of the remaining 10 were dismissed, but in three out of the four cases, the plaintiffs have either filed an amended complaint or filed a motion to alter the judgment and for leave to file an amended complaint. The fourth case was dismissed in early January, and the plaintiffs will likely file a motion to alter the judgement or appeal the dismissal. Two out of 10 were denied motions to dismiss, and four have yet to obtain court rulings on the initial motion to dismiss.

Split court rulings are likely to incentivize plaintiff firms to file similar cases, since only a few need to be successful to leverage settlements.

Barely Any New Actuarial Equivalence Allegations

Just one new lawsuit was filed in 2025 alleging that plan sponsors relied on outdated mortality tables and therefore underpaid benefits to retirees who elected to receive lump sum benefits or to married participants when converting single-life annuities to joint and survivor annuities. Fiduciaries have followed their plan documents in these cases, yet most courts have continued to deny motions to dismiss, calling into question whether ERISA has an implied “reasonableness” requirement that mortality tables be current and not outdated.

ESOP Litigation Analysis

In 2025, the 14 lawsuits targeting ESOPs all alleged improper valuation of company stock or insider benefit from a transaction. There were also 11 settlements of ESOP lawsuits in 2025, ranging from $450,000 to $84 million. At his confirmation hearing before the Senate Committee on Health, Education, Labor and Pensions in June 2025, Daniel Aronowitz, the former president of Encore Fiduciary and now the assistant secretary of Labor for the Employee Benefits Security Administration, stated he would “end the war on ESOPs.” The pledge from Aronowitz, who previously analyzed 2024’s 401(k) excessive fee litigation for PLANADVISER, resulted in the DOL’s January 2026 announcement that ESOPs were “removed from the [agency’s] national enforcement project list.”

Last fall, both labor committees in both the House and the Senate advanced the Retire through Ownership Act, which legal experts said would align ESOP valuations with IRS standards and reduce the valuation and fiduciary risk for ESOP trustees. The bill has been passed by the Senate and awaits a House vote.

Justin Bove is the chief revenue officer and fiduciary lead for Encore. He has over 20 years’ experience as a professional liability underwriter focusing on fiduciary lability insurance for public and private companies, governmental retirement systems and multiemployer benefit plans.

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of ISS STOXX or its affiliates.