Defined Benefit Plan Litigation


We represent plan sponsors in claims against investment advisors for failure to properly diversify plan investments.

Discretionary fiduciaries of an ERISA plan have a fiduciary duty to diversify investments of the plan so as to minimize the risk of large losses. This is an obligation that has been ignored by many active managers in the pension advisory industry.

Rather than manage a plan “solely in the interest of the participants and beneficiaries” and for their “exclusive benefit,” many active managers’ diversification strategy is to emphasize advisor profits through complicated alternative investments and complex products that put the plan at significant risk in a volatile market. 

In the current economic environment, correct application of the diversification requirement (to minimize risk of large losses) is is essential.


In today’s environment (2023) many employers are trying to avoid pension obligations by transferring risk of the company’s defined benefit plan to an insurance company.  The insurance company thereafter creates an annuity for future payments. The keys to protecting assets during a risk transfer to an insurance company is to focus on valuation of the plan assets and carefully evaluate for self-dealing. It is axiomatic that large money transfers allow for skimming and excessive fees.  The US Department of Labor has published a guideline for evaluating PRTs–known as Guideline 95-1.



What is Pension Risk Transfer?

Pension Risk Transfer (PRT) is the off-loading of existing pension responsibilities (risk) to an insurance company in connection a company’s termination of its defined benefit plan for its employees.

Is it Legal for a Company to Terminate its Defined Benefit Pension Plan?

Yes. Under ERISA, a company (Plan Sponsor) is allowed to terminate its defined benefit pension plan, so long as it provides for payment of non-forfeitable (vested) benefits that have accrued under the plan.

Are there Legal Constraints on a Pension Risk Transfer?

Yes. A Plan Fiduciary must abide by the standard ERISA fiduciary duties in termination of a defined benefit plan and replacing it through purchase of an insurance contract or annuity. See, discussion of ERISA fiduciary duties, here.


Have Questions about your Pension or Benefits Plan?