The Markets April 24, 2025

Inflows Into TIAA Traditional Hit 5-Year High

Market uncertainty has shifted investors toward safer investments, the firm says.

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Inflows into the Teachers Insurance and Annuity Association of America flagship annuity, TIAA Traditional, reached a five-year high in March, as investors sought safer bets amid market uncertainty.

“It’s important to have a well-diversified investment mix, including a guaranteed asset class, which can help buffer against market volatility,” said Jim Mullery, TIAA’s executive vice president of retirement solutions, in a statement. “Uncertainty in the financial markets can tempt investors to try to ‘time’ the markets, but it’s crucial to step back and seek professional advice before dramatically changing your financial plan.”

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Early April data shared by the company suggest continued demand for TIAA Traditional annuities amid ongoing market volatility, including record daily inflows and a monthly average of inflows projected to exceed the previous record set in March 2020.

A TIAA study, which encompassed data from 1973 through 2021, found that when included in a target-date structure, TIAA Traditional outperformed standard target-date funds 63% of the time, with gains averaging 1.7 times greater than losses.

In addition, TIAA Traditional embedded in a target-date structure needed 16% fewer assets than a standard TDF to receive equivalent income, leading to TIAA Traditional retirees holding more assets in their retirement accounts than those with assets invested in a standard TDF, according to the study.

In March, TIAA made its proprietary lifetime income annuities, including TIAA Traditional, available to all Americans through the TIAA IRA.

TIAA paid more than $5.9 billion in lifetime income to retired clients in 2024 and had $1.4 trillion in assets under management as of December 31, 2024.

Compliance April 23, 2025

MEP Plan Participants Win in Jury Trial Against Pentegra

A jury awarded a class of more than 25,000 employees and retirees more than $38 million.

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In a rare ERISA jury trial, a jury Wednesday awarded more than $38 million to a class of retirement plan participants alleging a fiduciary breach against Pentegra’s multiple employer plan.

In Khan et al. v. Board of Directors of Pentegra Defined Contribution Plan et al., a jury found that fiduciaries of Pentegra’s more than $2 billion Multiple Employer Defined Contribution Plan for Financial Institutions breached their fiduciary duties under the Employee Retirement Income Security Act by paying unreasonable recordkeeping and administrative fees.

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Filed in the Southern District of New York, the case was originally brought in 2020. The named plaintiffs are Imran Khan, Joan Bullock and Pamela Joy Wood, who represented themselves and all others with retirement savings in the plan since September 15, 2014. In March 2022, a federal court found most of the plaintiffs’ ERISA fiduciary breach claims were sufficiently pled to advance beyond the motion to dismiss stage in the litigation process.  

The jury verdict found that the plaintiffs proved, beyond a preponderance of evidence, that:

  • The board of directors of the Pentegra Defined Contribution Plan and its members—Sandra L. McGoldrick, Lisa A. Schlehuber, Michael N. Lussier, William E. Hawkins, Jr., Brad Elliott and George W. Hermann— breached their fiduciary duty by causing the plan to pay unreasonable fees to Pentegra Services Inc.;
  • Former CEO John E. Pinto breached his fiduciary duty by causing the plan to pay unreasonable fees to PSI;
  • PSI breached its fiduciary duty by causing the plan to pay unreasonable fees to PSI;
  • Pinto was a fiduciary to the plan and either (a) knowingly participated in an act or omission of the board, knowing such act or omission was a breach; or (b) had knowledge of a breach by the board and did not make reasonable efforts under the circumstances to remedy the breach; and
  • PSI was a fiduciary to the plan and: (a) knowingly participated in an act or omission of the board, knowing such act or omission was a breach; or (b) had knowledge of a breach by the board and did not make reasonable efforts under the circumstances to remedy the breach.

The jury also awarded damages to the plaintiffs of $38,760,232.

The participants were represented by the law firm of Schlichter Bogard LLC, and Pentegra was represented by Groom Law Group.

There are still allegations pending related to prohibited transactions, and those will be heard and decided by the court, not a jury.

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