WHITEHOUSE STATION, N.J., May 20, 2020 /PRNewswire/ -- Chubb released a new whitepaper exploring the surge in litigation against fiduciaries of employer-sponsored retirement plans, regardless of size. The paper, "The War on Retirement Fees: Is Anyone Safe?" was co-authored by Groom Law Group and examines 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 Martin, J.D., Senior Vice President, North America Financial Lines, Chubb. "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 C. Golumbic, Principal, Groom Law Group. "It's therefore critical for plan sponsor fiduciaries to understand their risks and take steps to potentially reduce their exposure."
According to the whitepaper, such steps include:
- Establish, follow and document a robust and prudent process for retaining recordkeepers and determining their fees
- Establish, follow and document a robust and prudent process for selecting and regularly reviewing plan investments and investment expenses
- Retain qualified, independent experts to assist with fiduciary decisions
- Document the process and rationale behind any fiduciary decision, being particularly meticulous when deciding to use more expensive products or services and/or when going against expert advice
To learn more, download "The War on Retirement Fees: Is Anyone Safe?" here: https://www.chubb.com/us-en/_assets/doc/2020-05.06-17-01-0271-war-on-retirement-plan-fees.pdf.
Chubb is the world's largest publicly traded property and casualty insurance company. With operations in 54 countries, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. As an underwriting company, we assess, assume and manage risk with insight and discipline. We service and pay our claims fairly and promptly. The company is also defined by its extensive product and service offerings, broad distribution capabilities, exceptional financial strength and local operations globally. Parent company Chubb Limited is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index. Chubb maintains executive offices in Zurich, New York, London, Paris and other locations, and employs approximately 33,000 people worldwide. Additional information can be found at www.chubb.com.
Groom solves complicated legal issues for a variety of clients in finance, retirement, health care, and the public sector. Specializing in all aspects of benefits, health and retirement law, Groom was founded in the wake of a landmark regulatory development—the Employee Retirement Income Security Act of 1974. Ever since, rapid response to shifts in the benefits, retirement and health care policy paradigm has been our calling card. Informed by decades of experience, Groom's nationally-recognized litigation practice maneuvers the complex, dynamic landscape of employer, health, and pension-related litigation to successfully represent clients in federal and state courts, arbitrations, and government investigations across the country. In a world that moves as swiftly as the evolution of benefits law, versatility and willingness to adapt have become core tenets of our practice. We have one of the largest ERISA and employee benefits practices in the U.S. with over 85 attorneys. Additional information can be found at www.groom.com.