Compliance November 27, 2019

Settlement Announced in Invesco Self-Dealing Suit

Though Invesco previously prevailed in the lawsuit, the plaintiff was in the process of filing an amended complaint.

Reported by

Parties in a lawsuit accusing Invesco of self-dealing in its 401(k) plan have filed a Notice of Settlement.

It may seem strange that Invesco has agreed to settle the case since a U.S. District Court Judge previously granted summary judgment in favor of Invesco. However, in that opinion, the court also allowed the plaintiffs 20 days to file an amended complaint.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

In the previous opinion, the judge wrote: “The Court does not agree with defendants that leave to amend the complaint should be denied as futile. Plaintiff’s allegations that during the class period, between 55% to 68% of all plan investments were affiliated with Invesco, and that by December 31, 2016, 81% of investments made by plan participants were in Invesco-affiliated funds, give the Court pause when it takes into consideration the allegation that the bonus performance criteria under the Invesco Executive Incentive Bonus Plan includes assets under management, net revenue yield on assets under management, operating revenues, and net asset flows.”

These allegations are further concerning, the Court states, considering the plaintiff’s allegations regarding the limitation of access to non-Invesco affiliated funds.

Invesco was granted summary judgment, though, because the judge felt the plaintiff’s claims were lacking sufficient strength to state plausible claims. The court docket shows that, prior to the Notice of Settlement, the court had granted him extended time to file his amended complaint.

The Notice of Settlement says, “The parties will work diligently on a written settlement agreement and prepare and submit a motion for preliminary approval of the anticipated class settlement under Rule 23(e) of the Federal Rules of Civil Procedure. The parties anticipate they will be in a position to make that submission to the Court within 60 days.”

Break from the Grind November 26, 2019

Americans Would Rather Receive a Debt Payoff Than a Christmas Present

Having debt can significantly affect retirement confidence, and debt control management should be considered in retirement planning.

Reported by

Seventy percent of Americans are stressed about the upcoming holiday season, with 32% feeling the greatest stress about holiday finances, according to a survey from COUNTRY Financial.

Given a choice, and if money were no object, 49% of survey respondents said having one of their debts, such as their mortgage (20%), credit card debt (13%), personal loan debt (9%), or student loan debt (7%) completely paid off would be at the top of their holiday wish list. Only 19% selected receiving a vacation or luxury item.

Get more!  Sign up for PLANSPONSOR newsletters.

Those who put paying off a mortgage at the top of their wish list said they would need $82,895 in order to be able pay off all of their various debts; those who chose credit card debt said they would need $41,159; those who said student loans, $50,914; and those who selected all other personal loans, $16,992. 

Having debt can significantly affect retirement confidence. Americans think it is bad thing for those in retirement to be carrying debt, the LIMRA Secure Retirement Institute found in a survey. However, data from the New York Fed Consumer Credit Panel indicates that those between the ages of 65 and 80 increased their debt load by 40% between 2003 and 2015. The LIMRA Secure Retirement Institute found that 51% of retirees with debt are confident they will be able to live the lifestyle they want, but for retirees without debt, that soars to 70%. Retirees who default on federal student loan debt can see their Social Security payments partially garnished.

Surveys from the Employee Benefit Research Institute (EBRI) indicate employees are not realizing the importance of debt control in retirement planning. Although a majority of workers thought workplace financial well-being programs would be either very or somewhat helpful in better preparing or saving for retirement, fewer than half of workers thought debt counseling or budgeting help would be helpful, EBRI found.

Some researchers suggest that analysts and policymakers should explore ways to enhance debt management practices as they examine factors driving retirement security. One important decision after retirement is how to decumulate wealth, and the researchers note that recent cohorts will also need to manage and pay off their rising debt burdens in retirement. They point out this is made more difficult by the fact that older persons often move some of their assets to fixed income assets. In addition, if equity returns are lower in the future than they were in the past (as many predict), it will be important for current older cohorts to manage assets and liabilities wisely and pay off some of their higher-interest debt first. “Accordingly, it appears that cohorts entering retirement will need to ensure that their income and asset drawdowns suffice not only to cover their target consumption streams, but also to service their mortgage and other debt during retirement,” the researchers say in a working paper.

Asked by COUNTRY Financial, 29% of Americans surveyed said they plan to use a credit card for holiday purchases this year.

«