The U.S. Supreme Court's decision that retirement plan fiduciaries have a duty to continually monitor investments leaves a key issue of what exactly they have to do unresolved, industry observers say.

In its Monday ruling in Tibble et al. v. Edison International et al., the Supreme Court neglected to decide the scope of plan fiduciaries' duties regarding the ongoing monitoring of investment plan options.

The ruling vacated an earlier decision by 9th U.S. Circuit Court of Appeals in Pasadena, California, that decided against Edison employees who alleged that 401(k) plan fiduciaries at electric power company Edison International violated their duties when offering six higher-priced mutual funds over six identical lower-priced funds of the same institutional class that were available.

The U.S. District Court for the Central District of California said the employees failed to petition in a timely manner, as the six-year statute of limitations had passed.

The Supreme Court ruled unanimously that the 9th Circuit's decision, which decided in favor with the District Court's ruling, failed to recognize that plan sponsors are required to regularly review investments in the retirement plan.

“The court did not decide the key issue, which would be exactly what the fiduciary or plan sponsors would need to do regarding continuously monitoring the investment plan options,” said Washington-based Annette Guarisco Fildes, president and CEO of the ERISA Industry Committee.

“We'll have to wait and see what the Ninth Circuit says to determine what the scope of the duty is of the plan sponsor to monitor investments options if there's not been a significant change in circumstance,” Ms. Fildes said.

Until now, most plan sponsors, when fulfilling their duties to monitor investments, “were probably just looking to see if anything had changed to make it imprudent,” said Jan Jacobson, Washington-based senior counsel of retirement policy at the American Benefits Council.

But following this ruling, she said, some fiduciaries may adjust “how they look at that ongoing duty to monitor.”

She said that though there is a duty to monitor investments “it's not the same as the original duties involved in the selection in the investment to begin with,” when fiduciaries look at the “universe of funds” to compare and select them.

For many, the ruling is not surprising, said Michael Weddell, Southfield, Michigan-based senior consultant in the retirement practice at Towers Watson & Co.

He said most assume there is “a duty to monitor whether the investments are prudent on an ongoing basis,” adding that the Supreme Court “decision doesn't tell us what that duty to monitor involves.”

However, if the litigation doesn't settle and further clarification is given, “then it might affect what fiduciaries do in practice.”