Princeton Joins List of Schools Sued Over Retirement Plans

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jacklyn Wille

Princeton University is the latest college to be hit with a proposed class action challenging the fees and investment options offered through the school’s retirement plans ( Nicolas v. Trs. of Princeton Univ. , D.N.J., No. 2:17-cv-03695, complaint filed 5/23/17 ).

The lawsuit, filed May 23 in federal court in New Jersey, comes five days after similar allegations were levied against the University of Chicago and less than two weeks after complaints against Emory University and Duke University survived motions to dismiss. Other cases are pending against Yale, NYU, Vanderbilt,Cornell, and other prominent American colleges.

Like many other schools, Princeton is accused of failing to effectively negotiate for lower plan fees; choosing high-fee investment options that consistently underperformed their benchmarks; overpaying for record-keeping services by using multiple plan record keepers; and offering a TIAA-affiliated fixed-income fund that unreasonably restricted investors’ options.

The litigation onslaught against university retirement plans began in August 2016, when St. Louis-based Schlichter Bogard & Denton LLP filed proposed class actions against 12 schools in a two-week blitz. The most recent lawsuits—against Princeton and the University of Chicago—were filed by Schneider Wallace Cottrell Konecky Wotkyns LLP and Berger & Montague PC, a legal team that is currently litigating Employee Retirement Income Security Act lawsuits against TIAA, Aon Hewitt Financial Advisors LLC, and Charles Schwab Corp.

This series of lawsuits drew headlines for presenting claims untested in the world of ERISA litigation. Many cases challenge schools’ decision to offer a large menu of investment options—in some cases, more than 300—and to employ multiple record keepers. Both practices are said to cause confusion and lead to higher fees.

The newest case against Princeton also challenges the school’s use of multiple record keepers. According to the lawsuit, this arrangement led to record-keeping fees of more than $300 per participant in a single year, when a reasonable fee would have been closer to $35.

A spokesman for Princeton told Bloomberg BNA the school had just received the complaint and was reviewing it. He declined to comment further.

The employee suing Princeton is also represented by Lite DePalma Greenberg LLC.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

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

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