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Tens of thousands University of Pennsylvania employees may be able to take part in a $13 million settlement agreement over claims the school charged excessive retirement fees on its 403(b) plans.
A class action lawsuit was lodged against Penn in 2016 alleging that its approximately 20,000 employees who participated in the retirement plans were charged excessive record keeping fees. In addition, the plaintiffs claimed that the investment options provided to Penn’s 403(b) participants were subpar and lacking in performance.
The class action lawsuit accused Penn of violating a federal law meant to protect certain retirement accounts called the Employment Retirement Income Security Act (ERISA). Penn’s 403(b) plan saddled its employees with excessive retirement fees, claimed the plaintiffs, while also failing to offer well-performing investment options in violation of ERISA.
Specifically, the plaintiffs alleged that Penn employed not only one, but two record keepers to manage employees’ 403(b) accounts. In addition, the class action lawsuit reportedly claimed that, in maintaining a vast number of investment options for 403(b) plan participants, Penn retained underperforming securities.
In addition to paying out $13 million to end the class action lawsuit, Penn has reportedly agreed to change how it manages its 402(b) retirement plans.
Under the terms of the class action settlement, Penn has agreed to a three-year monitoring period by the plaintiffs’ lawyers to ensure it is in compliance with the agreement. Penn must provide a more streamlined selection of investments to plan participants and also take action to lower plan fees, including moving to a single record keeper.
“This settlement includes both financial compensation and valuable non-monetary improvements to Penn’s retirement plan going forward. We are confident that these critical changes will better enable Penn employees and retirees to build their retirement assets for the future,” an attorney representing the plaintiffs told the Associated Press.
The class action lawsuit filed against Penn was one of the first of a series of complaints against institutions of higher learning over allegedly excessive retirement plan fees, according to the Daily Pennsylvanian. Reportedly, seven other universities have settled similar claims prior to Penn’s $13 million agreement.
Are you a University of Pennsylvania employee? Did you notice excessive retirement fees applied to your 403(b) plan? Tell us about your experience in the comment section below!
The lead plaintiffs are represented by Schlichter Bogard & Denton, LLP.
The Penn Excessive Retirement Fee Class Action Lawsuit is Sweda, et al. v. The University of Pennsylvania, et al., Case No. 17-3244 in the U.S. District Court for the Eastern District of Pennsylvania.
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