If you become big enough, you can get sued. That is the lesson I tell everyone when someone mentions to me when a large plan provider or a large plan gets sued.
Jerry Schlicter’s law firms has targeted the Pentegra Defined Contribution Plan for Financial Institutions, a multiple employer plan, or MEP, for a class action lawsuit.
The case claims that the Defendants acted to enrich themselves, including Pentegra, by allowing exorbitantly unreasonable expenses to be charged to participants for administration of the Plan. The suit also alleged that the defendants “profit from collecting additional fees directly from employers who participate in the Plan—putatively to pay for “outsourced” fiduciary responsibility—but act directly contrary to that assumed fiduciary responsibility by draining the retirement assets of Plan participants to enrich themselves.”
The MEP has 27,227 participants and $2.1 billion in assets, according to the lawsuit. The lawsuit invokes claims that participants in the Plan subsidize Pentegra’s marketing materials and whitepapers that tout their MEPS.
According to the plaintiffs, the plan “paid Pentegra at least $9.52 million in direct recordkeeping and administration fees, or an average of $359.70 per participant,” rising to $10.58 million, or $388.77 per participant by 2018. These fees are clearly are eye popping for a plan that size. The lawsuit compares this MEP to other MEPs that charge participants hundreds less per participant.
