Research + Insights
We are keeping score and staying ahead of the industry.
We don’t mean to scare you, but the government is making a push to protect American workers and their retirement savings. That means new rules and stricter enforcement. If you think you’re immune, insured, or otherwise protected, just remember: Many of the plan sponsors in the crosshairs had no idea they were breaking the rules.
Johnson & Johnson… and big litigation
Johnson & Johnson, which has more than 140,000 employees, most of whom live in the U.S., faces a class action lawsuit over its employee health plan. While the scope—and potential financial impact—to J&J remain unclear, there lawsuit is full of lessons for employers who provide health coverage to their team. The lawsuit alleges that J&J failed to act as a fiduciary for plan participants in three major ways. Let’s dig in.
This sinister healthcare middleman flies under the radar
If you are seeing $0 in fees as part of your plan design, then likely there are hidden fees. The NY Times recently explored hidden fees in health care spending; we break down the takeaways for plan sponsors.
FTC vs. PBMs: Regulators take on the middlemen
The FTC has pharmacy benefit managers (PBMs) in its crosshairs. The crackdown is designed to protect consumers (your employees) but it could cause complications for plan sponsors.
What the Kellogg case tells us about fees
A years-long lawsuit that’s made its way from district court to a circuit court appeal and back again highlights the risk posed by recordkeepers who go rogue. Essentially, the plaintiffs in this case allege that Kellogg failed to adequately monitor the recordkeeper for its retirement plan, which led to excessive fees that were passed on to plan participants… to the tune of $7 million dollars. Most of the court decisions to date have revolved around litigation versus arbitration and other logistical questions, but the ongoing case offers a very real cautionary tale to plan sponsors who can’t justify their fees in detail.
Including private investment options in a 401(k)
Investors are increasingly interested in alternative investment options as a way to manage risk. For plan sponsors, however, adding alts to their menu of offerings can create regulatory risk, rather than mitigate it.
Can you be sued if the market tanks?
Technically, ERISA includes language protecting participants from underperformance—in other words, if the investments in your plan underperform a benchmark for the broader market. In reality, these types of cases are hard to prove.
Gen Xers aren’t ready for retirement
Gen X is nearing retirement age and about half do not feel they are prepared. As the first generation of U.S. workers to rely mostly on 401(k) plans as their primary retirement savings, it’s a test of the program. The problem is the 401(k) puts the onus on the participant to determine how much to save and how to invest. The average retirement savings of a Gen X household is roughly $150,000 — a far cry from the $1.5 million that Americans say they need to retire comfortably.
Americans are skipping meals to save money
Intuit Credit Karma conducted a survey where one-quarter of the participants said they have skipped meals or sacrificed other spending due to rising costs. The price of food has jumped since the pandemic. A fact that has stressed many Americans. This is just one of the statistics to come out of the study. Food insecurity is always a major issue, and many people report changing the way they shop and prepare meals to combat the rising costs.