Prestigious Universities Sued Over Retirement Plan Options

Prestigious Universities Sued Over Retirement Plan Options

By: Daniel Steingold | August 12, 2016

A number of leading universities have been sued as of late over claims that their school-sanctioned retirement plans charge excessive administrative fees.

The latest universities to fall prey to these accusations include Duke, Johns Hopkins, the University of Pennsylvania, and Vanderbilt.

Just this past Tuesday, the Massachusetts Institute of Technology (MIT), New York University, and Yale also had such charges levied against them.

The gist of the complaints is that the universities used multiple record keepers, instead of one, to operate the plans and perform any administrative work that they required. According to the plaintiffs, if all of these services were performed by just one of these service providers, millions of dollars a year could have been saved.

The suits also allege that too many investment options were offered, many of which were rather expensive. The bevy of options also apparently confused employees.

Duke, for example, used four providers (TIAA, Vanguard, Fidelity, and Valic) in 2014, offering 400 investment choices.

Vanderbilt also used the same four providers at the end of 2014, offering 340 investment choices until April 2015. At that point, they switched over to only offering Fidelity and 14 investment options.

Duke has defended its range of choices, claiming that they are “carefully managed” and give employees as much flexibility as possible.

While it is unclear exactly what damages the plaintiffs are seeking, it appears as if they are all class-action suits. The universities expect to defend themselves vigorously.

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