Tennessee employees of Lowe’s Companies, Inc., may be happy about a recent federal court decision that denied the company’s motion to dismiss the lawsuit against it. However, the dispute is far from over. Employees are seeking $100 million in losses they claim resulted from the company’s violation of the Employee Retirement Income Security Act of 1974, or ERISA, which requires fiduciaries of employee investments and pensions to act in the best interests of plan participants.
In 2015, Lowe’s replaced eight of its 401(k) investment options with the Hewitt Growth Fund, leaving participants with only a few other options to choose from. The Hewitt Growth Fund apparently performed so poorly that only two other companies in the United States included it as part of their retirement plan options. Nevertheless, the class action lawsuit alleges that Lowe’s transferred more than $1 billion into the fund, resulting in millions of dollars in losses for investors in just the few years since the change occurred.
The lawsuit claims that Lowe’s failed to monitor the investment consultant responsible for the 401(k) plan. The plaintiffs want the court to determine whether the consultant company made the changes to Hewitt Growth Fund to further its own interests rather than for the best interests of the plan members. They also hope to accomplish changes in the management of the company’s plan to avoid further breaches of fiduciary duty.
The loss of funds from a retirement plan can be devastating to employees who are counting on that plan for their later years. ERISA’s standards provide protection against unscrupulous or careless management of those plans. Those in Tennessee who suspect their employee investment plans are being improperly managed can reach out to an attorney who understands how ERISA applies to their situation.