The argument next week in Anderson v. Intel Corp Investment Policy Committee presents a dispute under the Employee Retirement Income Security Act. The basic issue is how to handle claims that employers have invested employees’ retirement funds imprudently. The specific question for the justices is whether it is enough for aggrieved employees to show that the retirement funds have performed worse than other funds without also showing any “benchmark” to assess that performance.
To provide context, the case involves the retirement funds for Intel. Like most employers in this century, Intel provides defined-contribution plans: it promises its employees that it will contribute specified amounts each year to investment plans for their employees. That is distinct from the defined-benefit plans of earlier generations, in which employers promised to provide their employees specific benefits, typically from the date of their retirement until death. To emphasize the obvious – the risks (and rewards) of investment are on the employees in the defined-contribution plan, where they were on employers in the defined-benefit plans of the 20th century.
Like many employers, Intel invests the funds for its employees’ retirements in specific funds that are managed and created on its behalf. The dispute arises because the Intel fiduciaries invested heavily in hedge funds and private equity, relatively volatile assets from which many retirement plans traditionally shy away. The employees have filed suit, contending that the relatively low returns on those plans reflect a breach of the fiduciary duty of prudence that ERISA imposes on those who manage such funds. The lower courts disagreed, reasoning that allegations of underperformance are not enough without an allegation of some “meaningful benchmark” by which the court could assess performance.
Quoting the Supreme Court’s many opinions on the topic, the employees emphasize the flexible and “context-sensitive” inquiry that ERISA requires for allegations that fiduciaries have fallen short of their statutory duty of care. From their perspective, the lower court’s rule is the kind of “categorical” pleading rule that contradicts the basic premise of the Federal Rules of Civil Procedure that a pleading is sufficient if it presents sufficient allegations, holistically, to justify a plausible inference of imprudence. Here, they say, the choice to invest heavily in non-traditional assets, coupled with the relatively low return, is enough to meet that standard.
Intel’s fiduciaries, by contrast, emphasize that the duty of prudence is a “duty of process, not performance.” They argue that pointing to other funds that performed better than Intel’s funds says nothing at all about the prudence of those funds unless they had the same goals as the Intel funds. If a market upswing led a fund designed to minimize volatility – a legitimate and prudent goal – to perform less well than an aggressive fund, that says nothing about imprudence at all. Thus, they say, a complaint for underperformance – as opposed to a complaint for self-dealing or the like – needs to show that Intel’s funds performed more poorly than other funds that adopted similar risk-mitigation goals. Because the complaint includes no such allegations, the fiduciaries argue that the lower courts correctly found that it fell short.
I expect the Anderson argument will be lively, as the case presents a set-piece, if you will, of the basic perspectives on civil litigation. Some of the justices, perhaps those with experience as a trial judge, will accept the idea that a relatively loose complaint warrants the scrutiny of a complete discovery process and trial. Others, more skeptical of the burdens of the “eye-watering costs of discovery” that Intel’s fiduciaries emphasize, will likely think the standard the employees suggest makes it far too easy to put an employer through the costs of extended litigation.
Recommended Citation: Ronald Mann, Justices to debate investment choices for retirement funds, SCOTUSblog (Oct. 2, 2026, 9:30 AM), https://www.scotusblog.com/2026/10/justices-to-debate-investment-choices-for-retirement-funds/