Groom Law Group, together with Chubb, explores the surge in litigation against fiduciaries of employer-sponsored retirement plans, regardless of size. In the whitepaper, “The War on Retirement Fees: Is Anyone Safe?” Groom principal, Lars Golumbic, and Chubb Senior Vice President, North America Financial Lines, Alison Martin, examine the recent history and trends relating to excessive fee claims. The paper also discusses the plan features that may make it a target of litigation, and the steps fiduciaries can take to potentially reduce exposure to excessive fee lawsuits.
“Excessive fee claims have historically been filed against only the largest organizations, specifically those large, publicly-traded companies with multi-billion dollar 401(k) retirement plans,” said Alison. “However, over the last several years, there has been a significant surge in litigation targeting a broader range of plans, despite evidence that average plan fees have been steadily declining.”
According to the whitepaper, excessive fee claims are taking aim at all types of plans, including 403(b) plans, multiple employer plans, defined benefit pension plans and even Employment Retirement Security Act (ERISA)-exempt plans. All types of plan sponsors are also being targeted, including publicly traded companies, privately held companies, universities, not-for-profit organizations, financial institutions and healthcare systems. In excessive fee claims, plan participants allege that plan fiduciaries have failed in their duty to ensure that plan recordkeeping and investment fees are reasonable. They also allege that plan investments have underperformed, costing participants millions of dollars in lost retirement benefits.
“The pace of ERISA class action filings is at an all-time high, and these cases are not only expensive to defend, but are also expensive to settle. Some of the largest settlements cost tens of millions of dollars,” said Lars. “It’s therefore critical for plan sponsor fiduciaries to understand their risks and take steps to potentially reduce their exposure.”
To download “The War on Retirement Fees: Is Anyone Safe?” click here.
Webcast: The War on Retirement Plan Fees
Listen in as co-authors Alison Martin and Lars Golumbic discuss the nature of excessive fee lawsuits and the potential risk factors for plan fiduciaries.
