Multiple lawsuits were filed this summer alleging the use of the BlackRock LifePath suite of target date funds in retirement plans was imprudent. The suits allege that the funds were selected due to their low cost without any consideration of performance. The cases point to other target date options that experienced past performance superior to the BlackRock options. The problem with these cases is they challenge the outcome of the fiduciaries’ decision rather than focusing on the process that was used to make the decision. Courts have repeatedly refused to judge fiduciary decisions in hindsight and these cases seem to be asking them to do just that.
A U.S. District Court recently accepted the defendant’s motion to dismiss in Beldock v. Microsoft. It is our opinion that this decision should be followed in the cases that mirror the Microsoft case. Allegations challenging the outcome of fiduciary decisions are simply a bridge too far. Plan sponsors who follow a prudent decision-making process should not fear repercussions from plaintiffs using hindsight to identify options that produce better results.
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