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Voya Accused of Layering 401(k)s With Unnecessary Fees

"According to the lawsuit ... Voya contracted with federally registered investment adviser Financial Engines Advisors LLC to provide advice to participants in Voya-administered retirement plans. Voya then charged participants a fee of as much as 50 basis points for this arrangement ... Voya's arrangement with Financial Engines is structured largely so that Voya can collect an unnecessary layer of fees from the retirement plans it oversees, according to the Nestle plan participant's complaint. In her view, this is an attempt by Voya to avoid federal laws limiting its ability to provide financial advice steering retirement savers toward its own products." [Patrico v. Voya Fin., Inc., No. 16-07070 (S.D.N.Y. complaint filed Sept. 9, 16]

Some Allegations in 401(k) Case Against Voya Survive Motion to Dismiss

"[The district court judge] dismissed ERISA complaints alleging mismanagement of a Voya stable value fund, a Voya target-date series, a Voya real estate fund and two other funds offered by third-party investment managers. He also dismissed the allegation that the defendants failed to monitor administrative fees. However, he refused to dismiss allegations that the defendants engaged in certain prohibited transactions covered by ERISA." [Ravarino vs. Voya Financial Inc., No. 21-1658 (D. Conn. Jun. 13, 2023)]

Judge Scales Back Claims Against Voya in Suit Alleging Excessive Fees

"The plaintiff, a participant in the plan, first alleged that Voya breached its fiduciary duties under [ERISA] by charging excessive fees. But 'a party does not act as a fiduciary with respect to the terms in the service agreement if it does not control the named fiduciary's negotiation and approval of those terms,' [Judge Colm Connolly] wrote ... Connolly rejected the plaintiff's argument that because Voya can charge different Daily Asset Charges over the lifetime of the plan, it has discretion over the plan and is therefore a fiduciary." [Goetz v. Voya Financial, Inc., No. 17-1289 (D. Del. Feb. 4, 2020)]

Lawsuit Alleges Voya Charged Big Fees to Small 401(k)

"Voya Financial Inc. is accused in a new lawsuit of charging excessive record-keeping and administrative fees to a small 401(k) plan... The participant seeks class treatment for 47,000 plans and 4.5 million individual investors. Based on certain fees charged to the plan, Voya 'potentially earns over $1 billion in excessive compensation at the expense of the individual plans and their participants,' the lawsuit said." [Goetz v. Voya Financial, Inc., No. 17-1289 (D. Del., complaint filed Sept. 8, 2017)]

Voya Scores Win in ERISA Suit Over Robo-Adviser Fees

"The investor, a participant in Nestle USA Inc.'s 401(k) plan who filed a proposed class action, can't use [ERISA] to challenge Voya's fees, a federal judge ruled June 20. That's because Voya wasn't acting as an ERISA fiduciary when it negotiated the fees for Financial Engines' advisory services, the judge said." [Patrico v. Voya Financial, Inc., No. 16-7070 (S.D.N.Y. June 20, 2017 ]

Voya's Win in 401(k) Fee Suit Involving Financial Engines Bodes Well for Other Record Keepers

" 'The court here has said that an entity can be a fiduciary for some purposes and not others, and with respect to this fee issue, Voya was not a fiduciary,' [attorney John Utz] said. 'It was not a fiduciary because it wasn't acting as a fiduciary in negotiating fees, and ... once the arrangement was in place, there was not anything Voya could do to control its compensation.' Voya, for example, couldn't control the number of participants using the personalized advice services offered in the Nestle 401(k) plan." [Patrico v. Voya Financial, Inc., No. 16-7070 (S.D.N.Y. June 20, 2017 ]

Voya Faces ERISA Complaint Targeting Its Own Plan

"The complaint alleges these funds were not selected and retained for the plan as the result of an impartial or otherwise prudent process, but were instead selected and retained by the defendants because they benefited financially from including these options in the plan." [Ravarino v. Voya Financial Inc., No. 21-1658 (D. Conn. complaint filed Dec. 14, 2021)]

Voya Financial Comment Letter to EBSA on Proposed ESG Rule

"[T]he Proposal is fundamentally flawed for two reasons. First, among the many qualitative factors an ERISA fiduciary may appropriately consider in making an investment decision, the Proposal singles out ESG factors and treats them with skepticism.... Second, in the context of participant-directed individual account plans, the Proposal fails to account for the positive effect on investor behavior that the availability of ESG-focused investment options can have, and fails to identify how and when changes to employee participation and / or saving rates can be validly considered by an ERISA fiduciary when selecting available plan investments."

Voya Again Wins Dismissal of Stable Value ERISA Lawsuit

"[T]he district court's second take concludes the lead plaintiff's underlying allegations do not provide 'more than a sheer possibility that a defendant has acted unlawfully.'... [T]he decision points out ... [that] ERISA requires a fiduciary's 'complete loyalty,' but fiduciaries 'do not violate their duties to a pension plan by taking action which, after careful and impartial investigation, they reasonably conclude is best to promote the interests of participants and beneficiaries,' even if the decision 'incidentally benefits' the fiduciary. " [Dezelan v. Voya Retirement Ins. and Annuity Co., No. 16-1251 (D. Conn. Aug. 17, 2018)]

Voya Escapes Lawsuit Over 401(k) Robo-Adviser Fees

"A 401(k) investor who accused Voya Financial Inc. and its subsidiaries of overcharging for investment advice from robo-adviser Financial Engines Advisors LLC won't get another chance to make her case. A federal judge on March 13 denied the investor's request to amend her complaint ... The judge reiterated her prior conclusion that the investor couldn't use [ERISA] to challenge these fees, because the defendants weren't acting as ERISA fiduciaries when negotiating fees with Financial Engines."