Transamerica has agreed to a $3.8 million settlement with employees who participated in the company’s own 401(k) plan. The employees alleged in a class action lawsuit that the insurance giant breached its fiduciary duty under the Employee Retirement Income Security Act (ERISA) by charging participants excessive fees to manage the plan.
As reported by Investment News (free reg. req’d), the plaintiffs claimed that Transamerica offered investment options that benefitted the company rather than its employees by charging higher than ordinary advisory and administrative fees. In addition to the monetary settlement, the company agreed to retain an unaffiliated investment consultant to evaluate its plans, rebate all mutual fund revenue sharing, provide no-cost record keeping, and add a low-fee bond index mutual fund to the $1.6 billion retirement plan.
Lawsuits of this type have been become more common. Lockheed Martin paid the largest settlement ever – $62 million – in a class action alleging excessive 401(k) fees, and last month Massachusetts Mutual Life Insurance agreed to a $31 million settlement with its employees. In the past few years, Fidelity Investments and Ameriprise Financial settled similar class actions for $12 million and $27.5 million respectively.
If you’ve worked hard to prepare for your future by participating in a company-sponsored 401(k), but believe the fees charged to administer the plan are robbing you of your retirement dollars, ERISA laws can protect you. The attorneys in Sommers Schwartz’s Complex Litigation Group are available to discuss your suspicions of plan mismanagement, so please contact us today.