Employee retirement plans are meant to provide financial security for those who invest in them. Depending on the type of plan, there may be numerous benefits, including tax breaks and ease of savings by having contributions and fees deducted directly from one’s paycheck. As with any investment, there is a measure of trust that those charged with managing the funds will act in an upright manner, and the Employee Retirement Income Security Act, also known as ERISA, sets guidelines for the ethical administration of plans.
Tennessee employees would be wise to be vigilant about the management of their retirement funds. The retirees of Duke University recently learned that the fiduciaries of their plan were supposedly engaged in self-dealing, and it was not the first time the institution had faced such allegations. Self-dealing occurs when a plan’s trustees use plan funds for their personal gain rather than the good of the contributors. In this case, Duke is accused of paying its employees’ salaries with money from the retirement plan.
The university allegedly used money contributors paid for the management of their plan, and some members have filed a lawsuit that alleges practices of self-dealing. The university faced a similar lawsuit in 2016. A separate lawsuit accuses the university of charging unreasonably high administrative fees. Since the university is a nonprofit, the retirement plans typically have lower management fees.
Duke denies its actions have violated the rules of ERISA, but it is not the only institution of higher learning that has faced such allegations. Tennessee employees may wish to take a careful look at the administration of their retirement plans. If they have questions or concerns about self-dealing, they may find answers by consulting an attorney.