Pioneer Natural Resources Sued Over 401(k) Fees

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By Carmen Castro-Pagan

Pioneer Natural Resources USA Inc. is accused of choosing inappropriate, high-cost mutual funds in its 401(k) plan and paying Vanguard unreasonable, excessive record-keeping fees ( Barrett v. Pioneer Natural Resources USA, Inc. , D. Colo., No. 1:17-cv-01579-WJM, complaint filed 6/28/17 ).

Pioneer, with 401(k) plan assets exceeding $500 million, caused plan participants to pay excessive fees by failing to offer available, low-cost share classes of mutual funds as plan investment options, according to a lawsuit filed June 28 in the U.S. District Court for the District of Colorado. The company and its 401(k) plan committee also failed to offer lower-cost collective trust retirement funds, causing participants to pay hundreds of thousands of dollars per year in investment management fees, the complaint said.

The lawsuit also targets the record-keeping fees paid to Vanguard. Between 2012 and 2015, the number of participants in the plan participation 11.9 percent, from 3,939 to 4,410, and assets increased by 40.5 percent, from $356 million to $500 million, the lawsuit says. During this same time period, the plan’s direct compensation paid to Vanguard increased by 106 percent, from $141,924 to $291,794, the lawsuit says. In addition, Vanguard received annual fees through revenue sharing from at least 10 mutual funds offered as plan investment options.

The lawsuit was filed by an employee who has worked in the Colorado-based oil and gas company for more than 30 years.

In recent years, a number of major companies have been challenged in court over the way they manage their employees’ retirement plans. Intel Corp., CVS Health Corp., and Chevron Corp. have successfully defended lawsuits by participants challenging the investment options included in their retirement plans. Other companies, including Starwood Hotels, Fujitsu, Oracle Corp., American Airlines Inc., and Safeway Inc., have lost early bids to dismiss similar lawsuits.

The proposed class is represented by Franklin D. Azar & Associates P.C., a personal injury law firm that specializes in motor vehicle accidents, defective products, and slip-and-fall accidents, according to its website. The new lawsuit is the first time the Colorado-based law firm has filed an Employee Retirement Income Security Act class action against a major company over the way it handles its employees’ retirement savings, according to Bloomberg Law data. The law firm didn’t immediately respond to Bloomberg BNA’s request for comment.

Pioneer also didn’t immediately respond to Bloomberg BNA’s request for comment.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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