Investors in retirement plans place a great deal of trust in those responsible for managing the plans. After all, reaching retirement age only to find the funds have been mismanaged allows few options for recovery. Recently, numerous prestigious colleges across the country, including in Tennessee, have come under fire for the way their retirement plans are being handled, and class action lawsuits are growing, claiming violations of ERISA laws.
Participants claim the retirement funds established by these colleges violate the Employee Retirement Income Security Act by providing too many options for investors to choose from. Some plans offer more than 100 possibilities, and participants say this is confusing and overwhelming. It also apparently creates higher fees since options cannot be easily consolidated at a lower cost.
In addition to the impractical number of investment options, the many lawsuits claim that the colleges keep their plan fees high by using numerous administrators to manage the accounts. These two claims are apparently catching the attention of many because of a unique interpretation of ERISA regulations. While several of the colleges have filed to have the lawsuits dismissed, none have been successful so far. Currently, 16 colleges, including Vanderbilt University in Tennessee, are facing lawsuits from retirement plan participants.
The protection of retirement benefits is crucial for the future security of participants in those plans. When fiduciaries fail to act prudently and ethically in the management of the investments, participants have the right to take legal action. Enlisting the assistance of an attorney experienced in ERISA regulations is a wise move for those who seek answers and guidance in the most appropriate course of action.
Source: bna.com, "Columbia Retirement Plan Lawsuit Advances After NYU Ruling", Jacklyn Wille, Aug. 29, 2017