Edward A. Zelinsky (Yeshiva University – Benjamin N. Cardozo School of Law) has posted Legislating Loyalty, David Pratt (ed.), New York University Review of Employee Benefits and Executive Compensation (2026) (forthcoming) on SSRN. Here is the abstract:
The Protecting Prudent Investment of Retirement Savings Act (“PPIRSA”) and The Restoring Integrity in Fiduciary Duty Act (“RIFDA”) would both protect retirement assets by codifying the U.S. Supreme Court’s holding in Fifth Third Bancorp v. Dudenhoeffer that ERISA fiduciaries must invest plan funds only for “financial benefits” rather than pursue “nonpecuniary benefits” through their investment choices. Similarly constructive is the suggestion advanced by RIFDA to confirm that an ERISA fiduciary confronted with equivalent investment alternatives should select between them by random choice, rather than consider the alleged nonpecuniary benefits produced by either alternative. However, neither PPIRSA nor RIFDA addresses adequately the role of diversification: If an ERISA plan trustee confronts truly equivalent investment alternatives, the trustee should diversify by purchasing some of each equivalent alternative or by offering to participants the option to invest in each such alternative. Only when diversification is not feasible or desirable should an ERISA trustee decide between equivalent investment alternatives. And, then, a prudent, loyal trustee should pick between commensurate alternatives using random choice rather than attenuate the duty of loyalty by pursuing the chimera of nonpecuniary benefits.
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