3. Failing to offer a stable value fund. Plaintiffs have unsuccessfully sued Chevron, Anthem, and Insperity for failing to include stable value funds in their plans’ investment lineup. In Chevron, the fiduciary included a money market fund instead of a stable value fund. The court dismissed the case upon concluding that offering a money market fund “as one of an array of mainstream investment options along the risk/reward spectrum” satisfies ERISA’s prudence requirement. White v. Chevron Corp. 2016 BL 281396, N.D. Cal., No. 4:16-cv-00793-PJH, 8/29/16.
So it seems whatever a plan sponsor decides to do with a stable value fund, there is a risk of costly litigation. Despite some early successes in these cases, the increase in litigation cautions plan sponsors to carefully evaluate the prudence of offering a stable value fund as part of a diverse investment portfolio. If offering a stable value fund fits with a plan’s investment goals, then plan sponsors and fiduciaries must be careful in setting the fund’s level of risk. In fairytales it may be possible to get it “just right,” but at least in a world with plaintiffs, until more courts ring the death knell for such claims, stable value funds remain fodder for litigation.
Nancy G. Ross is a partner in Mayer Brown's Chicago office and co-chair of the ERISA Litigation practice. Ross focuses her practice primarily on the area of employee benefits class action litigation and counseling under the Employee Retirement Income Security Act of 1974 (ERISA).