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Supreme Court Will Decide If Overfunded Pension Plans May Be Sued

Employee Benefits, Compensation & ERISA   |   Business Transactions   |   Labor & Employment   |   August 23, 2019
Carlton Fields attorney Lowell Walters was quoted in a Society for Human Resources Management article, “Supreme Court Will Decide If Overfunded Pension Plans May Be Sued,” about the U.S. Supreme Court’s upcoming decision on whether overfunding inhibits plan participant’s claim of breach fiduciary duty.

In the case Thole v. U.S. Bank, a defined benefits plan was invested only in stocks, and when the plan lost money in the Great Recession and was therefore underfunded, plan participants sued. After a substantial contribution to the plan resulted in it being overfunded, the case was dismissed.

"In general, plans that have established investment committees that monitor investments throughout the year and try to balance costs with returns and diversifications win these lawsuits," commented Walters. "If Thole v. U.S. Bank is allowed to proceed, the company may be in a good position to come out victorious if it had a prudent process in place for monitoring its investments."

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