U. of Chicago Retirement Income Plan Members Sue University in ERISA Suit

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The University of Chicago is the defendant in a proposed class action filed on behalf of participants in its retirement income plan and contributory retirement plan who allege the school breached its fiduciary duty when it “failed to adequately investigate, examine, and understand” the true costs of administrative services provided to plan participants. The 41-page complaint describes alleged violations of the Employee Retirement Income Security Act (ERISA). As a result of the defendant’s conduct, the lawsuit claims, proposed class members ended up paying “grossly excessive and unreasonable” fees merely for administrative services.

The allegations in the complaint run the gamut of a failure to negotiate reasonable charges for recordkeeping, to the defendant’s alleged practice of effectively prohibiting plan participants from rerouting their investment options into equity funds and other investments “as market conditions or participants’ investment objectives changed.”

The complaint provides two examples that speak to the allegedly unsound manner in which decisions were made on behalf of retirement plan participants.

“One could reasonably infer from these circumstances alone that the defendant’s fiduciary decision-making process was either flawed or badly executed, but there is substantial additional evidence of a flawed process, such as (i) the inclusion of a dizzying array of 35 TIAA-CREF and more than 80 Vanguard investment options; and (ii) approval of a TIAA loan program that required excessive collateral as security for repayment of the loan, charged grossly excessive fees for administration of the loan, and violated U.S. Department of Labor rules for participant loan programs,” according to the lawsuit.