Key Learnings from Prominent Retirement Plan Class Action Lawsuits in Q3

By: Joe Dillon, CFP®
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The filing or updating of more than 20 ERISA-related lawsuits in the third quarter of 2019 is yet another indicator of the importance of regularly assessing the service providers for your organization’s retirement plan. Once again, excessive fees and investment performance were front and center in many of the cases.

It’s critical for plan sponsors to incorporate an evaluation of investment expenses and periodic benchmarking of service provider expenses into their ongoing plan and investment review process.

Here’s a quick review of three prominent cases from July through September:

  • Community Healh Systems (CHS) and Principal Financial Group were sued by participants who claimed that the plan offered “excessively expensive and poorly performing index funds in the plan that were managed by Principal.”
  • TriHealth Inc. was also sued by participants who claimed fees were excessive relative to similar plans. The complaint stated, “TriHealth’s decision-making, monitoring, and soliciting bids from investment funds was deficient in that it resulted in almost no passively managed funds options for plan participants, resulting in inappropriately high administrative plan fees.”
  • Safeway and Aon Hewitt reached a settlement in two lawsuits that accused the two companies of excessive investment and recordkeeping fees. Safeway and Aon Hewitt agreed to pay a combined $8.5 million to a settlement fund.

For more information or guidance on how to better assess your plan’s service providers, please reach out to Curi Capital’s Retirement Plan Solutions team at 984-202-2800.

Joe Dillon, CFP®

Joe Dillon is Curi Capital’s Managing Director of Retirement Plan Solutions, based in Raleigh, NC.

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