By Randy Myers
Various bills that would open new markets to the stable value industry are bouncing around Capitol Hill and some, policy experts say, have a real chance of being enacted into law—albeit not this year. In the meantime, the industry faces a new wave of litigation challenging stable value funds over their crediting rates and perceived safety.
Those were the key themes from a roundtable discussion at the 2025 SVIA Fall Forum in early October. Moderator Michael Leonberger, senior stable value portfolio manager at Invesco, led a panel featuring Irica Solomon, head of corporate citizenship, government affairs, and advocacy at MissionSquare Retirement; Kate Bonner, a principal at bipartisan public-policy firm Mindset; attorney Angela Montez, special counsel at Eversheds Sutherland; and attorney Jamie Fleckner, a partner at Goodwin Procter and chair of its ERISA Litigation practice.
CITs and 403(b)s
Congress has worked for years to allow the use of collective investment trusts (CITs) in 403(b) retirement savings plans. Securing such legislation would be an important win for stable value providers, who often structure their products as CITs and have therefore been largely shut out of that market, which primarily serves employees of schools, public hospitals and non-profits. The SECURE 2.0 Act of 2022 changed tax law to allow CITs into 403(b) plans, but legislators did not include the necessary changes to securities laws. That hurdle may finally be clearing, Montez and Solomon noted, with growing support in the House Financial Services and Senate Banking committees. In May, the House Financial Services committee passed H.R. 1013, the Retirement Fairness for Charities and Educational Institutions Act, which would permit CITs in both ERISA-covered and governmental 403(b) plans and also allow the use of insurance separate-account products. The bill faces little to no industry opposition, and the Senate has a companion version.
Montez said several new co-sponsors have signed onto the legislation in both chambers of Congress and predicted that once Congress reconvenes and turns its focus to the legislation, “there’s a fairly good chance this passes.” She credited SVIA President Zach Gieske with helping explain the bill’s components on Capitol Hill.
Stable Value as a QDIA
Stable value was once a popular default investment for new retirement plan participants. That changed after the Department of Labor, implementing the Pension Protection Act of 2006, excluded the asset class from designation as a permanent qualified default investment alternative (QDIA) under its QDIA regulations, favoring target-date funds, balanced funds and managed accounts instead. SVIA has been working with Mindset to draft proposed legislation—the working title is the “Retirement Income and Stability Act”—that would add stable value to the QDIA lineup. Bonner and her Mindset colleague Kendra Isaacson are seeking congressional champions for the proposal, with most meetings so far on the Senate side. The long-term goal, Bonner said, is to include the measure in the next retirement-related legislative package.
“It’s something that probably will gain a little more traction in the coming year than even we had originally hoped for,” Solomon said.
Montez noted that the DOL recently issued a private letter ruling blessing Alliance Bernstein’s use, as a QDIA, of a custom target-date style program that includes a guaranteed lifetime withdrawal benefit (GLWB).
“The advisory opinion is significant because, for the first time, the DOL confirmed that a QDIA can include a GLWB,” Montez said. “This should give some comfort to asset managers who are developing QDIA vehicles that include GLWBs and other income features, as well as to plan fiduciaries who are considering adopting these types of options.”
Montez said that while the opinion could provide a path for stable value to be used within a QDIA, “it would be a really heavy lift to try to have stable value as a standalone QDIA.” More likely, she said, stable value could be a component of another investment option, which would still expand market access for the asset class.
Solomon added that Congress also has legislation that would allow certain lifetime income products to be used as QDIAs.
“Given what the DOL has done [in the Alliance Bernstein case], we think there could be a tangential path for stable value—both from a regulatory perspective and a legislative perspective,” she said.
Private Assets in Retirement Plans
While there has been substantial discussion about allowing private assets to be offered as investment options in retirement plans, Bonner does not expect immediate legislative action.
“The momentum has been in the administration, on the executive-order side,” she said, referencing a presidential executive order directing agencies to explore expanded use of alternative assets in retirement plans. Legislation, she said, may come later.
Still, Montez described movement on private assets as an “all-of-government” effort involving the administration, Republicans in Congress, and federal agencies. She also noted that there are bills under consideration that would expand the definition of an accredited investor for retail investors, although some Democrats, like Senator Elizabeth Warren of Massachusetts, have reservations about expanding access within 401(k) and other defined contribution plans.
SECURE 3.0: Farther on the Horizon
Both the Senate HELP Committee and the House Ways and Means Committee are working on potential successors to the last two major retirement laws, the SECURE Act of 2019 and SECURE 2.0, the presenters said. They cautioned, however, that the committees are “pretty far apart” on what a potential SECURE 3.0 package would include. Bonner said Isaacson believes something could come together late this year or early next year, although Bonner sees that as ambitious.
“Speaking as someone who just left the Hill, if you don’t get your bipartisan issues out of the way in Q1 of an election year, you’re kind of out of luck,” Bonner said.
Bonner also questioned whether federal agencies are prepared to implement new retirement legislation given that they have not finished implementing provisions of the prior SECURE acts. Many agencies are dealing with dwindling staff, she noted, and the Securities and Exchange Commission is moving toward a more deregulatory stance. Even so, she predicted that retirement legislation will be a high priority for the next Congress. Solomon emphasized that there is no single “SECURE 3.0” bill at present, but rather a collection of proposals. Their broad themes, Montez said, include expanding coverage to workers who currently lack access to a retirement plan—such as gig workers and other independent contractors—citing the Retirement Savings for Americans Act, the Unlocking Benefits for Independent Workers Act, the Independent Retirement Fairness Act, and the newly introduced Pensions for All Act. She also noted that HELP Committee Chair Senator Bill Cassidy, a Republican from Louisiana, is eager to promote wider use of Employee Stock Ownership Plans, a priority he shares with Daniel Aronowitz, the new head of the DOL’s Employee Benefits Security Administration (EBSA).
Litigation Heats Up
Fleckner observed that ERISA litigation has a long history but has proliferated recently. In 2025 alone, he said, there have been 24 cases directly challenging stable value investments in defined contribution menus, adding that he’s “never seen anything to that scale.” Many complaints point to competing products with higher crediting rates as evidence that plan fiduciaries acted imprudently in selecting their stable value fund.
Elsewhere, Fleckner said, four cases filed this summer “might signal a new trend by alleging that stable value funds are exposing plan participants to undue risk based on the financial strength of wrap insurers.
“These would be insurers that all of us would think are very safe, generally,” he said, noting that his firm is working with Gieske and others from SVIA to consider where they might file amicus briefs in support of defendants.
On a cheerier note, Fleckner cited a favorable outcome in September in a case involving the retailer AutoZone, where plaintiffs alleged the company breached its fiduciary duties by failing to replace the plan’s stable value fund and by permitting a vendor’s program to direct participants into higher-cost actively managed funds. The court rejected those claims, finding that AutoZone prudently monitored plan investments, relied on the advice of outside experts, and made appropriate changes within a reasonable timeframe.
Finally, Montez said, EBSA’s Aronowitz has said he wants to curb “regulation by litigation” and is looking to rein in excessive-fee and other lawsuits that he views as inappropriate.