Pfizer Hit with Excessive Fee 401(k) Complaint

A former Pfizer Inc. employee is alleging the pharmaceutical company caused harm to retirement plan participants, according to a complaint filed last week in federal court in Michigan seeking class action status.   

Plaintiff Matthew Miller, represented by Walcheske & Luzi LLC and the Haney Law Office PC, claims in the complaint that plan fiduciaries operating the Pfizer 401(k) Savings Plan breached their duties under the Employee Retirement Income Security Act by incurring unreasonable total recordkeeping and administrative fees and for failing to monitor other fiduciaries.

The complaint, filed in U.S. District Court for the Western District of Michigan, Southern Division, named as defendants Pfizer Inc; the Board of Directors of Pfizer Inc; and the Savings Plan Committee of Pfizer Inc. Pfizer’s largest manufacturing site is based in Kalamazoo, Michigan.  

“During the Class Period, and unlike a hypothetical prudent fiduciary, Defendants followed a fiduciary process that was ineffective given the objectively unreasonable Total RKA [recordkeeper and administration] fees it paid to Fidelity and in light of the level and quality of Total RKA services it received that were materially similar to services available through other recordkeepers and provided to other mega plans,” the complaint states.

Miller is seeking for the court to certify a class period as applying to all participants and beneficiaries in the Pfizer Savings plan (excluding defendants or any participant/beneficiary who is a fiduciary to the plan) beginning June 8, 2017, and running through the date of judgment. Fidelity Investments has served as the recordkeeper for the Pfizer plan throughout the putative class period, according to Brightscope, a data provider owned by Institutional Shareholder Services Inc., which also owns PLANSPONSOR.

Fidelity was not named as a defendant in the complaint.

In 2021, the Pfizer plan comprised—as of the most recent available data from Brightscope—about $21.4 billion in retirement assets for 54,000 participants.  

The defendants—as fiduciaries responsible for the plan and participants—should have lowered the plan’s total recordkeeping and administrative expenses by soliciting bids from vendors—via requests for proposals, requests for information and fee benchmarking from competing providers—and using their “massive size and correspondent bargaining power” to negotiate for fee rebates, but they did not do so or did so ineffectively, according to the complaint.

“From the years 2017 to 2022, based upon information derived from the Plan 5500 Forms and 404(a)(5) participant fee disclosures, because Defendants did not act prudently, and as compared to other Plans of similar sizes and with a materially identical level and quality of services, the Plan caused Plan participants to suffer losses (when accounting for compounding percentages/lost market investment opportunity) a total cumulative amount in excess of $10,542,525 in Total RKA fees,” the complaint states.

The complaint requests the court to designate Miller as class representative for the putative class and requests a judgment compelling the defendants to make good to the plan all losses to the plan resulting from the defendants’ alleged breaches of fiduciary duty, including restoring to the plan all losses resulting from paying unreasonable total RKA fees and restoring to the plan all profits which the participants would have made if the defendants had fulfilled their fiduciary obligations.

The plaintiff also requested a judgment directing Pfizer to disgorge all profits received from the plan; equitable relief in the form of accounting for profits, imposition of a constructive trust or surcharge against Pfizer as necessary to effectuate relief; and to prevent Pfizer’s unjust enrichment.  

Miller’s attorneys, Walcheske & Luzi, are based in Brookfield, Wisconsin, and the Haney Law Office is based in Grand Rapids, Michigan. 

Pfizer representatives did not return a request for comment.