Intel Now Faces Consolidated Suit Over Alternatives in TDFs

Now that the U.S. Supreme Court has ruled on the meaning of 'actual knowledge,' Christopher Sulyma has joined a lawsuit filed against Intel last year.

A former participant in two retirement plans sponsored by Intel Corp., whose original Employee Retirement Income Security Act (ERISA) lawsuit was heard by the U.S. Supreme Court, has reiterated his claims, joining another suit questioning underlying investments in the plan’s target-date funds (TDFs).

Christopher M. Sulyma joined a lawsuit filed in August 2019 by Winston R. Anderson. During Sulyma’s original case filed in 2015, Intel argued that the lawsuit was not filed within ERISA’s shorter three-year statute of limitations, which it said applied because Sulyma had “actual knowledge” of the use of the underlying investment options in the TDFs. Intel based its “actual knowledge” argument on the fact that investment disclosures were posted on a website that Sulyma had visited.

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In February, the Supreme Court ruled that although ERISA does not define the phrase “actual knowledge,” its meaning is plain. Actual knowledge is only established by genuine, subjective awareness of the relevant information being considered—not by the mere possession of documents or the theoretical availability of information in print or digital disclosures sent to would-be litigants, the high court said.

The combined lawsuit challenges the use of hedge funds and private equity investments as underlying funds in custom TDFs offered in Intel’s defined contribution (DC) retirement plans. It claims that the defendants breached their fiduciary duties by investing a significant portion of the plans’ assets in risky and high-cost hedge fund and private equity investments.

In June, the Department of Labor (DOL) issued an Information Letter, saying “a plan fiduciary would not, in the view of the department, violate the fiduciary’s duties under Sections 403 and 404 of ERISA solely because the fiduciary offers a professionally managed asset allocation fund with a private equity component as a designated investment alternative for an ERISA covered individual account plan.” The letter included five paragraphs detailing considerations for plan fiduciaries in evaluating and monitoring the investments.

Retirement industry stakeholders will be watching to see whether and how the DOL letter effects the outcome of the case.

Women’s Retirement Confidence Has Ebbed Since Start of Pandemic

A mere 17% of women say they are very confident they will be able to retire comfortably, according to the Transamerica Center for Retirement Studies.

Nearly a quarter, 24%, of women who are working or who have recently lost their job say their confidence in their ability to retire comfortably has declined amid the pandemic, according to “Women and Retirement: Risks and Realities Amid COVID-19,” a report by the Transamerica Center for Retirement Studies.

A mere 17% of women say they are very confident they will be able to fully retire with a comfortable lifestyle.

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“2020 marks the 100th anniversary of women’s right to vote in the U.S.,” says Catherine Collinson, president and CEO of the Transamerica Institute and the Transamerica Center for Retirement Studies. “Since then, women have made great strides in educational achievement and career opportunities. Despite this progress, they continue to be at greater risk than men of not achieving a financially secure retirement.”

Fifty-two percent of women say they have experienced one or more negative impacts to their employment as a result of the pandemic, including reduced work hours (24%), layoffs (16%), reduced salaries (13%), furloughs (13%) and/or early retirement (4%).

Women say they have several financial priorities that compete with one another. These include paying off debt (59%), saving for retirement (50%), building emergency savings (44%) and covering basic living expenses (33%).

Seventy percent of women are saving for retirement, be that in a current workplace plan (49%), outside of work (31%) or in a former employer’s plan (9%).

Despite their concerns about retirement, women are keeping a positive outlook for the most part, with more than 80% saying they  have close relationships with family and/or friends, 85% saying they are generally happy and 84% saying they are enjoying life. However, 44% often feel anxious, and 35% are having trouble making ends meet.

Thirty-eight percent of women have served as a caregiver during the course of their working careers, and, among this group, 91% have made an adjustment to their work situation.

“During the pandemic, women are being stretched to their limits, in some instances balancing their job responsibilities with home schooling children and, possibly, caregiving for an aging parent or loved one,” Collinson says. “Right now, it is especially important for women to take care of themselves and their own well-being.

Fifty-four percent of women expect to work past 65 or never retire, and 56% plan to work at least part time in retirement. Of this latter group, 81% say it is for financial reasons. And 76% say it is to remain active.

Women have saved a median of $28,000 for retirement. Millennial women have a median retirement savings of $11,000; Generation X, $46,000; and Baby Boomers, $84,000. Women have a median of a mere $5,000 in emergency savings. Among Millennials, this is $2,000; Gen X, $5,000; and Boomers, $10,000.

To safeguard women’s financial futures, Transamerica recommends they engage in financial planning by creating a budget, prioritizing expenses, setting both short- and long-term goals and developing a retirement strategy. According to a survey Transamerica conducted in June, only 19% of women have a written financial strategy for retirement.

Transamerica also says women should be proactive about remaining employable past 65 or in retirement. Transamerica found that only 46% of women are focused on performing well in their current job. A mere 41% are keeping their job skills up to date, just 20% are networking, and only 18% are perusing the job market.

Beyond this, Transamerica says women should safeguard their health. Fifty-eight percent of women say they are eating healthy foods, 55% say they seek medical attention as needed, 54% are exercising regularly and 53% are getting plenty of rest.

Start the conversation, Transamerica implores. Only 22% of women discuss saving, investing and saving for retirement with family and friends.

“Preparing for retirement involves careful budgeting, saving, planning and goal-setting,” Collinson says.

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