Princeton University is settling a class-action lawsuit over the school’s 403(b) plans for $5.8 million, according to court records filed July 28.
The agreement ends the three-year-old case, in which plaintiffs alleged the school breached its fiduciary duties of loyalty and prudence. The retirement plans carried exceptionally high administrative charges and included restrictive, poorly performing and expensive investment options, the plaintiffs stated in the 2017 complaint.
The school tentatively reached a settlement with the plaintiffs in April, though the terms were not finalized or disclosed at the time. The case was one of many lawsuits under the Employee Retirement Income Security Act aimed at elite colleges and universities. That wave of lawsuits followed a massive volume of Erisa litigation against 401(k) sponsors a few years earlier, a trend that continues today.
Princeton’s defined-contribution plans represented more than $2 billion in assets among more than 24,000 participants in 2018.
Along with the monetary component of the settlement, the university agreed to work to reduce the plan’s record-keeping fees, which the plaintiffs stated were more than $300 per year per participant. The school also agreed to issue a request for proposals for administrative services and third-party investment consulting. Further, the defendant agreed to review the TIAA collateralized loan program in the plan, as well as several TIAA investments that were central to the lawsuit.
The case is one of several that have focused on the TIAA Traditional Annuity, which the plaintiffs contend is highly restrictive. That product included a surrender charge of 2.5% for lump-sum payments, which could only be made within 120 days of leaving employment at Princeton, according to the complaint. Under normal circumstances, payments from the annuity are made over 10 years, via annual installments, the plaintiffs stated.
The plaintiffs are represented in the lawsuit by Berger Montague and Schneider Wallace Cottrell Konecky Wotkyns, which have been active in class-action retirement plan litigation over the past several years.
Princeton is represented by law firm Jackson Lewis.
While industry statistics pointing to a succession crisis can cause alarm, advisor-owners should be free to consider a middle path between staying solo and catching the surging wave of M&A.
New joint research by T. Rowe Price, MIT, and Stanford University finds more diverse asset allocations among older participants.
With its asset pipeline bursting past $13 billion, Farther is looking to build more momentum with three new managing directors.
A Department of Labor proposal to scrap a regulatory provision under ERISA could create uncertainty for fiduciaries, the trade association argues.
"We continue to feel confident about our ability to capture 90%," LPL CEO Rich Steinmeier told analysts during the firm's 2nd quarter earnings call.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
