In 2025, plaintiffs continued to file ERISA breach of fiduciary duty class actions targeting large defined contribution plans at a prolific pace. More than 60 such lawsuits were filed this year, and, as expected, plaintiffs continue to bring forfeiture, recordkeeping, and investment challenges. But there has also been a twist this year—embedded within approximately half of this year’s morass of filings were allegations challenging the crediting rates and structure of stable value fund investments. Courts have only just begun to weigh in on this latest round of filings, rendering a handful of opinions that echo the divide among district courts over the proper pleading standard for challenges to other types of investment options and recordkeeping fees in defined contribution plans.
Past Stable Value Fund Claims
Stable value funds can be a useful tool in a well-constructed plan with a diverse array of investment options. They specifically provide participants access to an investment vehicle that protects capital while producing a meaningful rate of return relative to other conservative asset classes like bonds or money-market funds. As such, they are often popular amongst risk-averse investors and retirees. The popularity of stable value funds among participants has resulted in a significant aggregation of assets in these products that has attracted the attention of the plaintiffs’ bar over the years.
The limited number of challenges to stable value funds in past years often focused on fees. Plaintiffs would claim that a particular stable value fund’s fees were too high relative to a mismatch of comparators, or they would attack these products’ fee structures, claiming that certain investment returns retained by insurance issuers of stable value products involved excessive “compensation” (often labeled as “spread”). These claims generally gained little traction with courts. For example, courts found plaintiffs’ spread allegations implausible because the stable value contracts established that the challenged funds did not afford the provider the discretionary authority over the crediting rate, which was set by formula, or that the underlying investment assets and any returns on them were not plan assets.
In addition to fee-related challenges, plaintiffs would sporadically attack stable value funds’ crediting rates as “too low” in comparison to other stable value products, without accounting for the differences in contractual terms that strike a balance of crediting rate, asset stability, and risk profile, all of which vary significantly amongst stable value product offerings. These challenges were largely rebuffed by the courts, mostly because the allegations were found, much like spread allegations, to be in conflict with the terms of the underlying stable value contracts or because the allegations were implausible due to a lack of a meaningful comparator.
The 2025 Wave
In 2025, plaintiffs launched a renewed challenge to stable value investment products. This recent spate of litigation is not driven by a change in the law or types of stable value products offered in the market. Rather, it is likely driven by the significant amount of assets that are aggregated in these accounts attracting the attention of plaintiffs’ counsel, and COVID-era monetary policies that led to a rising interest rate environment beginning in 2022. The resulting market value losses sustained by underlying bond portfolios are reflected in the crediting rates of certain products. What is most notable is the volume of filings—30 cases in the past 12 months.
These lawsuits—brought either as standalone claims, or tacked on to more extensive defined contribution plan challenges (e.g., forfeitures, recordkeeping fees, or investment challenges)—have generally followed the same playbook as other recent 401(k) challenges. Specifically, plaintiffs have asserted that plan fiduciaries breached their fiduciary duties by offering stable value funds or guaranteed investment products (“GICs”) that have structures that are allegedly too risky, or that deliver crediting rates that are lower than those of a handful of other stable value funds in the marketplace, which plaintiffs label “underperformance.”
Plaintiffs attempt to support these claims by including a comparator table in their complaints (often recycled complaint to complaint) that purports to identify the crediting rates of supposedly comparable stable value investments (oftentimes a “rotating cast” of comparators that varies year-over-year within the challenged period). Based on these simplistic allegations, plaintiffs then make broad and conclusory allegations that the challenged funds and plaintiffs’ comparators are all sufficiently “similar” such that the availability of these other, higher crediting rates in the market demonstrates a lack of prudence on the part of a plan fiduciaries to obtain a higher rate.
Defendants have met this most recent wave of challenges at the pleadings stage with motions to dismiss. These motions have largely focused on correcting plaintiffs’ mischaracterizations and misunderstandings of the challenged stable value products and have argued that the complaints fail to include information about comparator stable value funds sufficient to plausibly allege that they are meaningful benchmarks—in other words, that plaintiffs have failed to provide a sound basis for comparison that would show that a prudent fiduciary with like aims under like circumstances would have selected a different product.
As defendants commonly point out, to present the court with a meaningful benchmark, plaintiffs must allege that the challenged fund shares the same structure as the comparator funds. Those comparisons (to be meaningful) should account for key differences amongst stable value vehicles that impact their crediting rates, for example: their structure and vehicle type (e.g., general accounts, separate accounts, synthetic GICs); their key terms (withdrawal restrictions, market value adjustments, minimum crediting rates, and rate adjustment cadence); and, the risk, duration, and protection associated with any underlying investments that may back the product. Plaintiffs’ failure to grapple with these meaningful distinctions amongst stable value products is an inherent pleading deficiency that, defendants argue, shows that plaintiffs are making the very kind of hindsight, apples-to-oranges comparisons that courts repeatedly reject as insufficient to state an ERISA investment underperformance claim.
Courts have just begun deciding motions to dismiss in this recent wave of filings. Those decisions have, to date, been a mixed bag. The outcomes have largely depended on the particular allegations of each lawsuit and courts’ willingness to scrutinize the comparator allegations as closely as the Supreme Court in Hughes v. Northwestern University has said they should at the pleadings stage, giving “due regard to the range of reasonable judgments a fiduciary may make based on her experience and expertise.” For example, in the earliest opinion, Carter v. Sentara Healthcare Fiduciary Committee (E.D. Va.), the court denied defendants’ motion to dismiss, finding, with minimal scrutiny, that plaintiffs’ generalized allegations of underperformance and lack of process sufficed to state a claim. By contrast, in addressing allegations very similar to those in Carter, two other courts (Grink v. Virtua Health, Inc. (D.N.J.) and Clinton v. Baxter International, Inc. (N.D. Ill.)) granted motions to dismiss on the stable value fund claims.
The Grink court specifically held that plaintiffs failed to allege a “meaningful benchmark” for the challenged product, and both Grink and Clinton held that plaintiffs failed to plausibly allege material and sustained underperformance. The court in Clinton, notably, homed in on the defect inherent in these complaints––plaintiffs erroneously compare the crediting rate of the challenged stable value fund over the class period to an average rate produced by a “rotating cast” of “cherry-pick[ed]” comparators from different years over the challenged class period. Such comparison, the court noted, provided “no consistent benchmark” from which to plausibly infer any fiduciary breach.
These initial holdings, taken together, suggest stable value claims may be outcome dependent on a court’s willingness to scrutinize whether the complaint’s underperformance allegations are backed by a demonstration of material and sustained underperformance in comparison to a meaningful benchmark.
Looking Ahead
We expect rulings on more stable value challenges in the first half of 2026, as several motions to dismiss are pending. Those rulings should provide further insight into courts’ views of the sufficiency of the pleadings of these stable value fund challenges. Fiduciaries selecting stable value funds must choose from myriad competitive offerings in the marketplace that strike different balances between return, risk, and asset preservation, amongst other variables. In our view, it would be a disservice to Hughes’ requirement that courts “give due regard to the range of reasonable judgments a fiduciary may make” if, at the motion to dismiss stage, courts fail to consider these competing and difficult tradeoffs fiduciaries face when selecting an appropriate stable value offering for their plan.
While some of these lawsuits may get past the pleading stage, these challenges in their current form do not appear well positioned to withstand more exacting scrutiny in later phases of litigation. For that same reason, the allegations in these complaints do not present a compelling reason to change a thoughtful stable value investment strategy as a component of a well-constructed and monitored menu of diversified investment options.
