Voya sued by participant in $2.8 million plan for excessive 401(k) fees

The plaintiff claims Voya potentially earns more than $1 billion per year in "excessive compensation" from its nearly 50,000 record-keeping clients

Sep 12, 2017 @ 1:34 pm

By Greg Iacurci

Voya Financial has been sued by a participant in a roughly $3 million 401(k) plan for charging allegedly excessive fees for record keeping and administration services, adding to an emerging trend of retirement-plan-fee lawsuits materializing among small plans.

Plaintiff Sharon Goetz is seeking the "return of undisclosed excessive and unreasonable asset-based fees" for its services to the $2.8 million Cornerstone Pediatric Profit Sharing Plan, and "to prevent Voya from charging those excessive fees in the future," according to a lawsuit filed Sept. 8 in Delaware district court.

Ms. Goetz is seeking class-action status, to represent other defined contribution plans that contract with Voya and its wholly owned subsidiary, Voya Retirement Insurance and Annuity Co., for record-keeping services.

Voya is one of the largest record keepers of DC plans. It provides services to around 47,000 DC plans, with 4.6 million participants and more than $300 billion in assets, according to data from InvestmentNews' sister publication Pensions & Investments.

The plaintiff claims Voya potentially earned more than $1 billion per year in "excessive compensation" on fees the company charged its DC plans.

"Voya denies the plaintiff's claims and we plan to vigorously defend this matter," spokesman Joseph Loparco said. "Other than that, we do not discuss pending litigation."

Lawsuits alleging excessive 401(k) fees for investment-management and record-keeping services aren't new — their prevalence has increased steadily over the past decade. However, those focused on small retirement plans — the market the majority of 401(k) advisers operate in — are fairly new, and some anticipate this as a growing trend.

A participant in a $1.1 million 401(k) plan filed a lawsuit in June against Nationwide for allegedly excessive record-keeping and administration fees.

LaMettry's Collision Inc., an employer sponsoring a $9 million 401(k) was sued in May 2016 for breaching its fiduciary duties, as were fiduciaries of a $25 million plan in July last year.

The Voya lawsuit — Goetz v. Voya Financial, Inc. et al — alleges the Cornerstone plan paid roughly $30,790 for record-keeping services in 2014, amounting to $1,466 per participant; fees increased to $34,568 in 2015, or $1,819 per participant, according to the suit.

Comparing those fees to a survey conducted by consulting firm NEPC, which found median record-keeping fees to be $64 per plan participant in 2015, the lawsuit claims Voya's fees were 36 times more than what would be considered reasonable.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Featured video

INTV

Why some retirement plan advisers think Fidelity is invading their turf

InvestmentNews editor Frederick P. Gabriel Jr. and reporter Greg Iacurci talk about this week's cover story that looks at whether Fidelity Investments is stepping on the toes of retirement plan advisers.

Latest news & opinion

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

Maryland jumps into fiduciary fray with legislation requiring brokers to act in best interests of clients

Legislation requires brokers to act in the best interests of clients.

8 apps advisers love for getting stuff done

Smartphone apps that advisers are using in 2018 to run their business more efficiently.

Social Security underpaid 82% of dually entitled widows and widowers

Agency failed to tell survivors that they could switch to a higher retirement benefit later.

Is Fidelity competing with retirement plan advisers?

As the Boston-based mutual fund giant expands the products and services it brings to the retirement market, some financial advisers say the firm is encroaching on their turf.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print