Kellogg faces complaint over ERISA managed account fees
A new lawsuit under the Employees Retirement Income Security Act has been filed in the U.S. District Court for the Western District of Michigan, naming the Kellogg Company and various administrative boards and committees involved in the operation as defendants. the company’s defined contribution pension plan.
The main allegation in the Complaint is that the Defendants breached their fiduciary duty of care by requiring the Plan to pay excessive registrar fees and account maintenance fees, and by failing to remove their registrants in a timely manner. allegedly expensive registry. According to the complaint, the plan contracted with Transamerica Retirement Solutions between 2016 and 2020 before moving to Fidelity Investments in 2021. Neither archivist is named as a defendant in the lawsuit.
The lawsuit text references a number of prominent precedent-setting cases for arguing that under ERISA, a breach of fiduciary duty can survive a motion to dismiss without well-founded factual allegations directly related. the methods employed by the ERISA trustee. According to the plaintiffs, this situation is acceptable insofar as the complaint alleges facts which, if proven, would demonstrate that a proper investigation would have revealed to a reasonable fiduciary that the investment in question was improvident.
“The unreasonable fees for record keeping and managed accounts paid by deduction tell a plausible story that defendants breached their fiduciary duty of care under ERISA,” the complaint states.
A significant part of the complaint also seeks to establish that all major archivists quote fees for bundled recordkeeping and administration services on a per-participant basis. The complaint suggests that these quotes are generated “without regard to individual differences in the services requested, which are treated by archivists as unimportant because they are inconsequential from a cost perspective for the provision of the bundled services”.
“The vast majority of fees received by archivists generally come from fees for providing bundled services as opposed to ad hoc services,” the complaint alleges. “Because dozens of archivists can provide the full range of services required, plan trustees can ensure that the services offered by each specific archivist are apples-to-apples comparisons.
The complaint alleges that the Kellogg plan had a standard level of registrar and administrative services bundled together, providing registrar and administrative services of a “nearly identical level and quality” to other registrars. who also served mega plans during the proposed class period.
“There is nothing in the service and compensation codes disclosed by the plan trustees in their Form 5500 filings during the class period, nor anything in the Section 404 fee and service disclosure documents. (a)(5) of the Participant that suggest that the annual administration fees charged to Participants included any services that were unusual or above the standard record keeping and administrative services provided by all National Registrars to the Mega Plans”, indicates the complaint.
With respect to the topic of managed accounts, the complaint brings similar allegations. Plaintiffs allege that Defendants caused plan participants to pay excessive fees for the managed account services they made available to plan participants by not periodically soliciting bids from other service providers. managed accounts and/or unaware of market rates for managed account solutions, in order to renegotiate market rates.
The full text of the complaint is available here. Kellogg has not yet responded to a request for comment on the lawsuit.