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Compliance August 22, 2022
Global Insurance Firm Latest to Face ERISA Litigation
The plaintiffs claim familiar allegations pertaining to excessive recordkeeping and administrative fees.
Reported by John Manganaro
A new Employee Retirement Income Security Act lawsuit has been filed by a proposed class of plaintiffs in the U.S. District Court for the Southern District of New York, naming as defendants the Swiss Re American Holding Corporation, the firm’s board of directors and various committees allegedly tasked with operating the company’s defined contribution retirement plan.
As is common in ERISA lawsuits filed against large employers, the plaintiffs suggest their retirement plan’s fiduciaries failed to fully disclose the expenses and risk of the plan’s investment options to participants and beneficiaries. The lawsuit also alleges that plan fiduciaries allowed unreasonable expenses to be charged to participants and selected, retained or otherwise ratified high-cost and poorly performing investments.
“Prudent investments were readily available at the time defendants selected and retained the funds at issue and throughout the class period,” the complaint states.
According to the plaintiffs, the defendants breached their fiduciary duties of prudence and loyalty and mismanaged the plan by paying excessive recordkeeping fees to the plan’s recordkeeper, Great-West Financial, which is not named as a defendant in the lawsuit. They allege the breaches collectively cost the plan millions of dollars over the course of the relevant time period.
Swiss Re has not yet responded to a request for comment about the allegations. The filing of the latest ERISA suit comes during a busy year for retirement industry litigation, with multiple key rulings being issued by important courts and no sign of a slowdown in the overall pace of cases.
Resembling many of the prior lawsuits, the new complaint against Swiss Re includes an extensive generalized discussion of the retirement plan industry, seeking to establish that the costs of investment services and recordkeeping have fallen significantly in recent years. The plaintiffs argue the fees they paid during the proposed class period were substantially higher than industry averages, and they use this fact to allege that fiduciary imprudence or disloyalty must have occurred on the part of plan’s fiduciaries.
Similar allegations have met with very different results in previous ERISA cases, depending on the specific facts at hand and the precedents set in the specific district or circuit court hearing the case.
The full text of the complaint is available here.