What Do Workers Need to Plead When Their 401(k) Investments Are Underperforming?

The Supreme Court will decide the pleading requirements to properly allege investment underperformance under the Employee Retirement Income Security Act (ERISA). The outsized impact of even modest shortfalls in 401(k) income caused by imprudent investments is compounded by the retirement crisis currently facing older Americans.

Petition: Anderson v. Intel Corp. Inv. Policy Comm., No. 25-498 (Jan. 16, 2026)

Decision Below: Anderson v. Intel Corp. Inv. Policy Comm., 137 F.4th 1015 (9th Cir. 2025), cert. granted, 223 L. Ed. 2d 553 (2026)

Issue: Whether, for claims predicated on fund underperformance, pleading that an ERISA fiduciary failed to use the requisite “care, skill, prudence, or diligence” under the circumstances and thus breached ERISA’s duty of prudence when investing plan assets requires alleging a “meaningful benchmark.”

ERISA imposes heightened obligations on fiduciaries who oversee employee benefit and retirement plans. See 29 U.S.C. § 1104(a)(1). The duty of prudence requires fiduciaries to act with the “care, skill, prudence, and diligence” that a prudent person “acting in like capacity and familiar with such matters would use.” Id. This duty also requires the diversification of investments “so as to minimize the risk of large losses.” Id.

The pleading requirements for alleging plan underperformance as evidence of imprudence under 29 U.S.C. § 1104(a)(1)(B) has been the source of disagreement among federal courts. One key issue has been whether ERISA plaintiffs alleging investment underperformance must provide evidence of a “meaningful benchmark”—such as a similar mutual fund—to state a duty-of-prudence claim and, if so, what qualifies as a “meaningful benchmark” sufficient to overcome a motion to dismiss.

In this case, participants in Intel’s 401(k) and retirement plans alleged, among other things, that plan fiduciaries breached the duty of prudence by allocating high amounts of plan assets to hedge funds, private equity, and other alternative investments, thereby exposing the portfolios to excessive risk. See Anderson v. Intel Corp. Inv. Pol’y Comm., 137 F.4th 1015, 1019-20 (9th Cir. 2025), cert. granted, 223 L. Ed. 2d 553 (Jan. 16, 2026). Plaintiffs further alleged that fiduciaries imprudently failed to change course after successive years of underperformance and chose investments that benefited Intel’s venture capital interests at participants’ expense. Id.

The district court dismissed the complaint, and the U.S. Court of Appeals for the Ninth Circuit affirmed, holding that Plaintiffs’ underperformance claims warranted dismissal given the failure to allege a “meaningful benchmark,” defined by the court as a nearly identical comparator investment that shares the same “aims, … risks, and … potential rewards” and performed better. Id. at 1022-23. In doing so, the court rejected benchmarks identified by Intel’s own plan fiduciaries and discounted allegations that Intel’s challenged risky investment strategy was so unusual that no near-identical comparator existed. Id. at 1022-26.

Plaintiffs argued that neither ERISA nor federal pleading standards require a “meaningful benchmark” at the motion-to-dismiss stage and that such a requirement is especially problematic where fiduciaries allegedly adopt unconventional investment strategies, making comparable benchmarks difficult or impossible to identify. See Petition for Certiorari at 1-2, Anderson, No. 25-498 (2025). AARP and AARP Foundation filed an amicus brief supporting Plaintiffs’ position.

The Supreme Court granted certiorari to resolve the circuit court split over whether ERISA plaintiffs must plead a meaningful benchmark to state a prudence claim. The Seventh, Eighth, Ninth, and Tenth Circuits generally require benchmark comparisons in underperformance cases. See, e.g., Albert v. Oshkosh Corp., 47 F.4th 570, 582 (7th Cir. 2022); Meiners v. Wells Fargo & Co., 898 F.3d 120, 822 (8th Cir. 2018); Anderson, 137 F.4th at 1022; Matney v. Barrick Gold of N. Am., 80 F.4th 1136, 1148 (10th Cir. 2023). By contrast, the Sixth Circuit has held that, while relevant to the merits, meaningful benchmarks are not a pleading prerequisite. Johnson v. Parker-Hannifin Corp., 122 F.4th 205, 216 (6th Cir. 2024). The Third Circuit similarly rejected a categorical benchmark requirement. Mator v. Wesco Distribution, Inc., 102 F.4th 172, 181 (3d Cir. 2024). Oral argument is scheduled for October 6, 2026.

 

What's at Stake 

The Court’s resolution of this circuit split will establish the pleading standard governing ERISA claims alleging that fiduciaries breached their duty of prudence by choosing or retaining underperforming investments. The answer will significantly affect the ability of plaintiffs to challenge atypical or outlier investment decisions, for which comparable benchmarks may be unavailable. Losses caused by such decisions could force many older adults to work past retirement age or go back to work if they have already retired. This concern deepens for older adults who are unable to work due to health issues or fear the uncertain future of Social Security.

Stefan Shaibani, SShaibani@aarp.org