Those in the investment community have seen first-hand the increasing migration of savings into plans designed to fund retirement. Statistics from the ICI tell the story. Over the last three decades, the percentage of household assets invested in retirement accounts as opposed to other forms of savings has risen 150%, from 14% of all wealth to 35%.1 While there continues to be a significant public policy debate as to the appropriate form of retirement savings vehicles – and the current state of the economy and transition to a new administration have led to renewed interest in this debate2 – employer-sponsored retirement plans continue to dominate the landscape. Throughout much of the post-war 20th century, the primary employer-provided retirement benefit took the form of a defined benefit (“DB”) plan that guaranteed a certain level of retirement income for participating employees. Increasingly, employers have moved to 401(k)-style defined contribution (“DC”) plans, under which the actual benefit available depends on the amount contributed and any net investment gain or loss.3 In the current economic situation, the effects have been widely felt. By one account, over a trillion dollars in wealth was lost in DC plans as a result of the 2008 market decline alone.4
Against that backdrop, the tremendous rise in litigation under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) – which governs private employer sponsored benefit plans, including retirement plans – that began when the tech bubble burst in 2001 has continued unabated. Indeed, the growing economic troubles of the current economic crisis, coupled with the increased concentration of wealth in private employer sponsored retirement plans, has accelerated the trend. The cases brought with respect to these employee benefit plans challenge conduct in ways that touch upon a wide range of legal disciplines, including securities, employee-employer relations, trust law and tax. As the U.S. Supreme Court has recognized, ERISA itself is a “comprehensive and reticulated” statute.5 These cases often raise complex issues that require increasing specialization to litigate.Because of the importance of litigation developments under ERISA to those who sponsor or provide products and services to employee benefit plans, and the high stakes in many of these cases, Goodwin Procter is instituting this ERISA Litigation Update newsletter to keep our clients up-to-date regarding developments in this rapidly evolving area of law. For suggestions for future topics, and for any additional comments, please contact any of the attorneys listed.