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<< Older News  |  January 24, 2021

News

All News > Retirement Plan Investment Costs

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Schlichter Strikes Again, This Time Against Takeda Pharma's 401(k)
planadviser Link to more items from this source
Jan. 22, 2021

"The lawsuit alleges that plan fiduciaries selected unproven TDFs for the plan, failed to monitor them and failed to replace them when they underperformed." [Ford v. Takeda Pharmaceuticals U.S.A., Inc., No. 21-10090 (D. Mass. complaint filed Jan. 19, 2021)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

BlackRock 401(k) Plan Class Action Headed for Trial
Jackson Lewis P.C. Link to more items from this source
Jan. 19, 2021

"A class action alleging that BlackRock entities favored their own proprietary funds when selecting investment options for BlackRock's 401(k) Plan is headed for trial after [the District Court judge] denied both parties' motions for summary judgment[.]" [Baird v. BlackRock Inst'l. Trust Co., No. 17-1892 (N.D. Cal. Jan. 12, 2021)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

With 401(k) Plans, What You Don't Know Can Hurt You
John Rekenthaler, via Morningstar Link to more items from this source
[Opinion]
Jan. 19, 2021

"401(k) investors who use plans that have revenue-sharing agreements subsidize investors who do not. That is illogical. Why should one firm's employees have a weaker retirement plan because that organization's benefits department failed to understand the implications of revenue-sharing arrangements? Surely it would be better to require recordkeepers to bid for exactly what they will receive. No undercover payments, no surprises."

Tags: 401(k) Plans  •  Retirement Plan Information for Employees  •  Retirement Plan Investment Costs

401(k) Plan Administrator Sues VALIC Over Surrender Fees Charged to Plan
planadviser Link to more items from this source
Jan. 12, 2021

"The insurer is [alleged to have been] engaging in a prohibited transaction under ERISA when the fees were charged during a move to a new provider, as well as with self-dealing." [Markham v. VALIC, No. 21-007 (E.D. Cal. complaint filed Jan. 4, 2021)]

Tags: Retirement Plan Investment Costs

Plaintiffs Claim Fiduciary Breach Acknowledging Insufficient Data to Determine Reasonable Fee Levels
Hall Benefits Law Link to more items from this source
Jan. 6, 2021

"[T]he suit ... alleges that the defendants breached their fiduciary duties by ... '[1] authorizing the Plan to pay unreasonably high fees for recordkeeping and administration; [2] authorizing the Plan to pay unreasonably high fees for managed account services; and [3] engaging in self-dealing with regard to administration of the Plan.' " [Guyes et al. v. Nestle USA Inc., No. (E.D. Wis. complaint filed Oct. 9, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Revenue Sharing Affects DC Plan Participant Investment Choices
PLANSPONSOR; free registration may be required Link to more items from this source
Jan. 5, 2021

"[F]unds that revenue share are ... less likely to be deleted from revenue-sharing plans.... [F]unds that tend to revenue share on other menus and tend to pay higher rebates are significantly more likely to be added to revenue-sharing plans.... [R]ebates translate into higher expense ratios in the retirement setting, while direct fees are not significantly different across revenue-sharing and non-sharing plans. Consequently, participants face higher all-in fees in revenue-sharing plans."

Tags: Retirement Plan Investment Costs

Mutual Fund Revenue Sharing in 401(k) Plans
Veronika Krepely Pool, Clemens Sialm, Irina Stefanescu, via SSRN Link to more items from this source
Dec. 31, 2020

"Recordkeepers in DC pension plans are often paid indirectly in the form of revenue sharing from third-party funds on the menu. [The authors] show that these arrangements affect the investment menu of 401(k) plans. Revenue-sharing funds are more likely to be added to the menu and are less likely to be deleted. Overall, revenue-sharing plans are more expensive as higher expense ratios are not offset by lower direct fees or by superior performance. Rebates increase with the market power of the recordkeeper suggesting that third-party funds may revenue share to gain access to retirement assets."

Tags: Retirement Plan Investment Costs  •  Retirement Plan Investments

District Court Dismisses ERISA Fee Litigation Against 401(k) Plan for Failure to Exhaust Administrative Remedies
Proskauer Link to more items from this source
Dec. 7, 2020

"[P]laintiff argued that her claims were 'deemed exhausted' because the Plan did not provide an administrative procedure for breach of fiduciary duty claims and because exhaustion would be futile. The court sided with defendants, first explaining that in the Eleventh Circuit, the exhaustion requirement is not limited to individual benefit claims under a particular plan, but also applies to claims arising from the substantive provisions of ERISA, such as those here." [Fleming v. Rollins, Inc., No. 19-5732 (N.D. Ga. Nov. 23, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Participants Accuse Cognizant of Breach of 401(k) Fiduciary Duties
Law|Street Link to more items from this source
Dec. 4, 2020

"The plaintiffs claimed that from December 2, 2014, the plan 'had at least 410 million dollars in assets under management,' which increased to over $1 billion in 2017 and 2018. The plaintiffs argued that since it is a large plan, it 'had substantial bargaining power regarding the fees and expenses that were charged against participants' investments.' " [Milano v. Cognizant Technology Solutions U.S. Corp., No. 20-17793 (D.N.J. complaint filed Dec. 2, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Exposing Excessive Fee Litigation Against America’s Defined Contribution Plans (PDF)
Euclid Specialty Managers Link to more items from this source
[Opinion]
Dec. 3, 2020

24 pages. "The copy-cat lawsuits -- now nearly 200 in number with over 90 filed in 2020 alone -- attack retirement plan investment options that are commonplace and longstanding.... Fiduciary liability insurance companies have paid an estimated $1B+ in settlements and well over $250 million in attorney fees to a growing network of plaintiff firms chasing these outsized fee awards.... Systemic reforms are necessary before American employers decide the cost and risk of offering voluntary defined contribution plans is too high."

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

Teva Dispenses $2.6 Million to Resolve ERISA Claims
Pensions & Investments Link to more items from this source
Nov. 23, 2020

"The plaintiffs filed suit in December, alleging that plan fiduciaries should have considered offering collective investment trusts instead of mutual funds, saying that the collective investment trusts were cheaper than comparable existing mutual fund options. They said the plan should have offered lower-cost share classes of mutual funds that were the 'exact same investment' as options in the plan."

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

SEC Whistleblowers Say 401(k)s and Pensions Are Cheated Out of Billions in Mutual Fund Payments
Forbes Link to more items from this source
Nov. 9, 2020

"Over the period from May 2018 through October 2020, three separate whistleblowers filed complaints with the [SEC] alleging that major financial intermediaries which provide custodial, recordkeeping, and trustee services to 401ks and pensions are short-changing their retirement plan clients."

Tags: Retirement Plan Investment Costs

Another Self-Dealing ERISA Fiduciary Breach Lawsuit Filed
planadviser Link to more items from this source
Nov. 5, 2020

"The lead plaintiff in the suit says her employer, a large financial services company, has inappropriately prioritized its own investments within a profit sharing retirement plan offered to employees." [Callaway v. The Northern Trust Co., No. 20-6497 (E.D. Ill. complaint filed Nov. 2, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Guide to Retirement Plan Fees
Francis Investment Counsel LLC Link to more items from this source
Nov. 4, 2020

"Allegations of unreasonable fees have dominated the headlines of ERISA litigation for years, and this trend will only continue to grow. How do plan sponsors protect themselves? ... [1] The 'big three' retirement plan fees ... [2] How to pay retirement plan fees ... [3] Plan participant cost allocation strategies."

Tags: Retirement Plan Administration  •  Retirement Plan Investment Costs

401(k) Retirement Plan Fee Litigation
Cammack Retirement Group Link to more items from this source
Oct. 28, 2020

"With more employees at home during a tumultuous year, many individuals had time to spend anxiously watching the volatile markets and ponder their retirement plan performance and fees. This year alone, there were 35 new 401(k) lawsuits, with the majority filed after the pandemic began in March. [A chart] lists the cases that were either newly filed, dismissed, went to trial, or settled, thus far, in 2020."

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Will Supreme Court Review Excessive Fee Litigation?
October Three Consulting Link to more items from this source
Oct. 28, 2020

"[The] Seventh Circuit took a view of excessive fee litigation that is in some respects at odds with the approach of other circuits, rejecting plaintiffs' claims that [1] recordkeeping fees should be evaluated on the basis of a flat/per capita fee and relative to plan size and [2] investment fees are 'excessive' and imprudent (under ERISA) where there is an identical lower cost alternative. On October 5, 2020, the Supreme Court invited the Acting Solicitor General to file a brief 'expressing the views of the United States' in this case." [Hughes v. Northwestern Univ., No. 18-2569 (7th Cir. Mar. 25, 2020; cert. pet. filed Jun. 19, 2020)]

Tags: Retirement Plan Investment Costs

Plan Participant Cost Allocation Strategies
Francis Investment Counsel LLC Link to more items from this source
Oct. 23, 2020

"As you consider your fee allocation methodology, prompt your plan oversight group with the following questions: [1] When was the last time we discussed how our retirement plan costs are allocated to plan participants? [2] Can we demonstrate the existing allocation methodology follows a diligent and documented process? [3] If a plan participant questions the fees paid, are we prepared to clearly outline the process we have in place to monitor and benchmark our plan's fees? [4] Are we effectively communicating this information to our participants?"

Tags: 401(k) Plans  •  Fiduciary Duties  •  Retirement Plan Investment Costs

Reliance Trust, Insperity Reach Deal on 401(k) Excessive Fee, Self-Dealing Suit
planadviser Link to more items from this source
Oct. 15, 2020

"The plaintiffs argued in their complaint that the defendants selected untested proprietary funds as investment options for the plan and retained those funds despite their poor performance, which benefited defendants at the expense of participants. The plaintiffs also claimed that defendants breached their fiduciary duties by selecting Insperity Retirement Services, a subsidiary of Insperity, as the plan's recordkeeper, paying it excessive administrative expenses, and failing to monitor and control the amount of those administrative expenses." [Pledger v. Reliance Trust Co., No. 15-4444 (N.D. Ga. settlement agreement filed Oct. 12, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Nestlé Named in Excessive Fee Suit
American Retirement Association [ARA] Link to more items from this source
Oct. 14, 2020

"The plan in question had more than 39,000 participants and approximately $4.2 billion in assets. As other excessive fee suits have alleged, this one alleges that 'after an inquiry reasonable under the circumstances,' the defendants breached their fiduciary duties by 'among other things: [1] authorizing the Plan to pay unreasonably high fees for recordkeeping and administration (RK&A); [2] authorizing the Plan to pay unreasonably high fees for managed account services; and [3] engaging in self-dealing with regard to administration of the Plan.' " [Guyes v. Nestle USA Inc., No. 20-1560 (E.D. Wis. complaint filed Oct. 9, 2020)

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

401(k) and 403(b) Fund and Fee Litigation Heats Up
Dickinson Wright Link to more items from this source
Oct. 13, 2020

"[T]he pace of these lawsuits has increased this year, with more than 50 class action lawsuits filed since the beginning of 2020.... [N]ow is a good time for every plan sponsor to evaluate its own fiduciary processes related to investment funds and service providers.... [P]lan sponsors should consider and be able to answer four important questions: [1] How much? [2] Why/What? [3] How do you know? [4] Can you prove it?"

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

Why Are We Seeing So Little Being Written About 401(k) Fees Now?
Fiduciary News; free registration required Link to more items from this source
Oct. 13, 2020

"With all of the attention on excessively high 401k fees from lawsuits, plus the Fiduciary Rule that was passed in the wake of the Great Recession, everyday investors are much more aware of the types of fees in their plan as well as what's a reasonable fee to charge for the service.... All this enabled 401k plan sponsors to more easily discovered previously hidden fees.... Individual investors also understand how they can act as a better fiduciary for their own personal investments."

Tags: 401(k) Plans  •  Retirement Plan Investment Costs

Are Public Pension Plans Leaving Money on the Table?
NEPC Link to more items from this source
Oct. 13, 2020

"Investment fees for state pension funds equaled 0.33% of plan assets in 2016 ... [T]his comprises over $2 billion in total annual investment fees for the 73 plans examined.... [T]he following key metrics and considerations can be used to effectively examine plan fees: [1] Ensure an apples-to-apples comparison for the most effective analysis ... [2] Include performance as a metric in a fee review: ... [3] Account for the prevailing market environment ... [4] Consider a performance-based fee model."

Tags: Retirement Plan Investment Costs

Lessons from a Rare ERISA Excessive Fee Suit Dismissal
PLANSPONSOR; free registration may be required Link to more items from this source
Oct. 9, 2020

"The complexity of retirement plan lawsuits often makes district court judges reluctant to approve early dismissal motions plaintiffs, but Salesforce has succeeded in defeating a complaint alleging it committed various fiduciary breaches.... [T]he ruling states, a plaintiff's bare allegations that passively managed funds were available as cheaper alternatives to the actively managed funds offered in the plan 'do not suffice to demonstrate imprudence.' ... The dismissal ruling explains that the court found compelling the defense's arguments that the plan engaged in revenue sharing in an appropriately considered, prudent and loyal manner." [Davis v. Salesforce.com, Inc., No. 20-1753 (N.D. Cal. Oct. 5, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

Multiple Employer Plans Now a Target of Fee Litigation (PDF)
Boutwell Fay LLP Link to more items from this source
Oct. 5, 2020

"In the first week of May, the ADP Total Source Retirement Savings Plan, a professional employer organization multiple employer 401(k) plan, was the recipient of two suits, one brought by one of the participating employers in the plan and the other brought by participants.... Both complaints make substantially the same allegations ... One of the interesting aspects of the case brought by McCaffrey Financial is that it is one of the employers that participates in the plan and as such it is a co-sponsor and co-fiduciary. It is suing in its capacity as a co-fiduciary."

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs

Schlichter Sanctioned for 'Reckless' Litigation
American Retirement Association [ARA] Link to more items from this source
Sept. 29, 2020

"Determining that the decision to pursue litigation was 'objectively reckless,' a federal judge has sanctioned the law firm of Schlichter Bogard & Denton with a fine of (up to) $1.5 million.... The suit -- which was dismissed in August -- was ... brought by participants in plans that had chosen Empower as recordkeeper, and investment options from Great-West and other fund complexes from which participants could choose.... Great-West Capital Management LLC and Empower Retirement (its affiliate plan administrator) requested the sanction, following an 11-day bench trial earlier this year where the plaintiffs failed to produce 'any legally cognizable evidence' of damages." [Obeslo v. Great-West Capital Mgmt. LLC, No. 16-230 (D. Colo. dismissed Aug. 7, 2020; sanction order Sep. 28, 2020)]

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs


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