austin3515 Posted March 24, 2017 Share Posted March 24, 2017 http://www.great-westclassaction.com/frequently-asked-questions.aspx#a1 Just curious what other people are telling their clients who are getting these letters. I assume those of you who work with Empower are getting these. It's a class action suit surrounding their Key Guar. Portfolio fund (i.e.,. their guaranteed interest fund). From what I have read, the impact of this suit could be wide reaching. It is essentially a rebuke of investment gains that exceed the crediting rate, even though of course if returns are less than the crediting rate the fund investors receive no losses (which is kind of the definition of insurance). The excess of course is compensating Empower not for the recordkeeping costs, but for the additional risk they are taking. It seems to me Empower was picked for this suit because they are the number 2 recordkeeper, and not because they are the only ones who have a product like this. I am especially curious to know if any write-ups have been done in the context of what this means for the industry as a whole. To me the implications seem vast. Austin Powers, CPA, QPA, ERPA Link to comment Share on other sites More sharing options...
jpod Posted March 24, 2017 Share Posted March 24, 2017 Quote I did not read the complaint or all of the FAQs. Obviously there is some theory which plaintiffs' counsel will advance for why this product is not a guaranteed benefit policy that does not hold plan assets, or how GW is otherwise a fiduciary with respect to the product. Do we know what that theory is? Link to comment Share on other sites More sharing options...
austin3515 Posted March 24, 2017 Author Share Posted March 24, 2017 Quote This lawsuit arises out of a financial product known as the Great-West Key Guaranteed Portfolio Fund (“Fund”). Great-West receives contributions to the Fund from members of the class like you and invests them in its general account. Great-West pays a certain amount of the return on that investment to class members, based on “a credited rate,” which is set by Great-West prior to each quarter. Plaintiff claims that Great-West retains too much of the Fund’s investment return (minus certain costs), to the detriment of Fund participants and beneficiaries (the class members), and in violation of ERISA. Great-West disputes that it has acted improperly or violated ERISA. In this lawsuit, Plaintiff makes three claims. First, Plaintiff alleges that Great-West breached its duty of loyalty under ERISA by setting the “credited rate” artificially low, and keeping too much of the overall return. Second, Plaintiff alleges Great-West engaged in self-dealing transactions which violate ERISA. Third, Plaintiff alleges Great-West knowingly participated in prohibited transactions in violation of ERISA. Quote Great-West denies that it did anything wrong. Great-West contends that the Fund is what is known as a “guaranteed benefit policy,” and ERISA provides that the assets underlying a guaranteed benefit policy are not subject to ERISA. Great-West contends, as a result, that it could not possibly have breached any obligations under ERISA, and that the Department of Labor has specifically authorized products like the Fund as being exempt from ERISA. Great-West contends that in addition to complying with the law, the KGPF has helped Great-West customers to reach their retirement goals. Austin Powers, CPA, QPA, ERPA Link to comment Share on other sites More sharing options...
K2retire Posted March 27, 2017 Share Posted March 27, 2017 Given the fact that the Key Guaranteed Portfolio Fund has consistently paid significantly more than prevailing money market fund rates, this suit mystifies me. Are they suggesting that there be no such option? Link to comment Share on other sites More sharing options...
austin3515 Posted March 27, 2017 Author Share Posted March 27, 2017 Given the fact that it includes the word "guaranteed" suggests that you are giving up risk and giving up return. I am with you 100%. What I am more mystified by is that there is not more being written out there about what this means for a ubiquitous investment product. Austin Powers, CPA, QPA, ERPA Link to comment Share on other sites More sharing options...
austin3515 Posted March 27, 2017 Author Share Posted March 27, 2017 20 minutes ago, K2retire said: Given the fact that the Key Guaranteed Portfolio Fund has consistently paid significantly more than prevailing money market fund rates, this suit mystifies me. Are they suggesting that there be no such option? From Bank of America's Website: "With at least $10,000 and a 12-month commitment, you can earn a steady 0.07% for the term with our Featured CD." Austin Powers, CPA, QPA, ERPA Link to comment Share on other sites More sharing options...
BG5150 Posted March 27, 2017 Share Posted March 27, 2017 Nice. Seven bucks for a $10,000 investment for a year. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
RatherBeGolfing Posted March 27, 2017 Share Posted March 27, 2017 8 minutes ago, BG5150 said: Nice. Seven bucks for a $10,000 investment for a year. Yea, but its $700 if you invest $1,000,000... Link to comment Share on other sites More sharing options...
austin3515 Posted March 27, 2017 Author Share Posted March 27, 2017 Or you can get 2,857% of that return by investing in the KGPF K2retire 1 Austin Powers, CPA, QPA, ERPA Link to comment Share on other sites More sharing options...
ESOP Guy Posted March 27, 2017 Share Posted March 27, 2017 1 hour ago, RatherBeGolfing said: Yea, but its $700 if you invest $1,000,000... Wow put me down for a couple of billion! Link to comment Share on other sites More sharing options...
CuseFan Posted March 27, 2017 Share Posted March 27, 2017 but the potential return for the plaintiffs' attorneys..... isn't that what this is really about? K2retire and austin3515 2 Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com Link to comment Share on other sites More sharing options...
austin3515 Posted March 27, 2017 Author Share Posted March 27, 2017 4 minutes ago, CuseFan said: but the potential return for the plaintiffs' attorneys..... isn't that what this is really about? Such a cynic Austin Powers, CPA, QPA, ERPA Link to comment Share on other sites More sharing options...
RatherBeGolfing Posted March 27, 2017 Share Posted March 27, 2017 24 minutes ago, austin3515 said: Such a cynic Well 33.33% is a great return on investment austin3515 1 Link to comment Share on other sites More sharing options...
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