Georgetown University Hit with Retirement Plan Participants’ ERISA Class Action

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A proposed class action has been filed by two plaintiffs on behalf of Georgetown University’s Defined Contribution Retirement Plan and its Voluntary Contribution Retirement Plan over allegations the school and two administrators violated their fiduciary duties to plan participants.

Filed over alleged abuses of the Employee Retirement Income Security Act (ERISA), the 50-page complaint claims that instead of leveraging the aforementioned plans’ substantial bargaining power to demand low-cost administrative and investment management services, the defendants instead failed to properly keep an eye on the plans’ expenses. As a result, the case charges, proposed class members paid “unreasonable and excessive” fees for investment and recordkeeping services. Elaborating, the complaint explains the defendants chose to continuously retain three different service providers rather than negotiate for reasonable, fixed fees with a single administrative unit.

“As a result,” the complaint reads, “[the plaintiffs] paid asset-based fees for administrative services, which continued to increase as the value of their accounts increased through additional contribution and investment returns even though no additional services were being provided to [the plaintiffs] as their fees went up.”

Moreover, the plaintiff claims the defendants altogether failed to properly monitor and evaluate the historical performance and expense of each of 300 hundred total investment choices offered to plan participants. The defendants’ alleged not-so-exhaustive fiduciary efforts, the case claims, resulted in investment options that a reasonable fiduciary would have excluded.

“The designation of three hundred investment alternatives made available under the Plans reflects an attempt by [the defendants] as ERISA plan fiduciaries to insulate themselves from ERISA liability at the expense of participants in the Plans, including [the plaintiffs],” the lawsuit charges. “Plan participants are not likely to have the investment expertise and sophistication to build an appropriate asset allocation from the hundreds of available investment choices.”