An amended lawsuit claims the pension plan offered by New York University offered high cost investment options, charged participants excessive fees and plan administrators failed to keep adequate records, all violations of the Employee Retirement Income Security Act (ERISA).
Lead plaintiffs allege in their class action lawsuit that administrators of the NYU pension plan breached their fiduciary duties to plan participants.
The pension plan at issue is New York University’s 403(b). The investments offered under the plan were allegedly confusing and often duplicative. They also cost plan participants more because the administrators selected retail options for the NYU pension plan, according to the lawsuit.
Excessive administration fees were charged to plan participants, say the plaintiffs, because administrators used an “inefficient multi-record keeper structure.” Initially, two financial firms kept NYU pension plan records – TIAA-CREF and Vanguard Group.
The plaintiffs argue that there was no reason to have two sets of record keepers. Both offered the same services and same number of committee members, alleges the lawsuit. The plaintiffs point out that eventually, in 2012, record keeping was transferred to TIAA-CREF only.
“A prudent process would have produced a different outcome,” say the plaintiffs in their complaint.
The class action lawsuit over the NYU pension plan was initially dismissed by a New York federal judge, but the plaintiffs submitted an amended complaint on Nov. 13.
ERISA Protections for Pension Plans
Congress sought to protect workers’ retirement income when it passed the Employee Retirement Income Security Act of 1974 (ERISA). ERISA also provides regulatory standards for disability insurance, life insurance, and health plans.
Generally, private employers and non-governmental entities offering retirement plans and other ERISA-protected benefits including certain forms of insurance must meet the following requirements:
- Hold plan fiduciaries accountable
- Provide participants the right to file a lawsuit against fiduciaries
- Provide information about the plan to participants
- Set minimum standards for participation, vesting, funding, and benefit accrual
- Provide principles of conduct for plan fiduciaries
Plan administrators also have a fiduciary duty to work in the best interest of pension plan or retirement plan participants. Administrators can violate that duty if they charge excessive fees, offer high cost or high risk investments, or fail to keep adequate records.
Pension plan participants have the right to make benefits claims using a written set of procedures provided by plan administrators. If benefits are denied, administrators must disclose the reason and provide the participant the opportunity to appeal.
Once the appeals process is exhausted, plan participants can initiate a lawsuit to obtain their benefits if necessary.
ERISA is a complex set of regulations that are hard to navigate. If you are concerned about the protection of your retirement income, contact an experienced ERISA attorney. The attorneys at Bradley/Grombacher are currently investigating ERISA complaints.
Note: Bradley/Grombacher is not representing the plaintiffs in this lawsuit.