The Supreme Court is set to hear arguments in Anderson v. Intel Corp Investment Policy Committee, an ERISA case about what employees must allege to show their retirement funds were managed imprudently. The specific question is whether underperformance compared to other funds is enough, or whether employees must also identify a "meaningful benchmark" to assess that performance.
Intel offers defined-contribution plans, and its fiduciaries invested heavily in hedge funds and private equity—assets many retirement plans avoid. Employees sued, claiming low returns breached the fiduciary duty of prudence. Lower courts dismissed the suit, reasoning that allegations of underperformance are insufficient without a benchmark. The employees argue that ERISA requires a flexible, context-sensitive inquiry, and that the heavy investment in volatile assets, coupled with low returns, supports a plausible inference of imprudence.
Intel's fiduciaries respond that the duty of prudence is a "duty of process, not performance," and that comparing Intel's funds to funds with different goals says nothing about imprudence. They argue the complaint must show underperformance relative to funds with similar risk-mitigation objectives. The parties agree that ERISA's duty of prudence is context-sensitive, but they differ sharply on what that requires at the pleading stage. The case highlights a broader divide over whether loose pleading standards should allow costly discovery or whether stricter rules are needed to protect employers from litigation burdens.