Employees trying to recover money stolen from thier retirement funds is becoming commonplace. Following piece (in part) from LA Times, Sept 26, 06
Suits Claim Excessive 401(k) Fees at 7 Firms
By Kathy M. Kristof Times Staff Writer
September 26, 2006
Seven of the nation's largest companies violated pension laws by allowing their employees to be overcharged by the outside firms running their 401(k) retirement plans, according to a series of civil lawsuits.The employees were charged millions of dollars in excessive management fees, which often were hidden in obscure agreements and not disclosed to the workers, the suits allege."At best, these fee structures are complicated and confusing when disclosed to plan participants," claim all the suits, which were filed this month by attorney Jerome Schlichter in federal district courts in Illinois, California, Connecticut and Missouri. "At worst, they are excessive, undisclosed and illegal."
"In its Retirement at Risk series last spring, The Times reported that hidden fees were quietly eroding the 401(k) nest eggs held by 44 million American workers, and that many companies pay little attention to the costs. Employee benefits experts say suits targeting 401(k) costs are rare but could become more common as companies increasingly scale back their traditional pension plans — making earnings from 401(k)s more crucial
In 401(k) plans, employees contribute a portion of their earnings to an investment fund, often with a matching contribution from their employer. The employee is typically given the option of investing in a variety of mutual funds, which charge fees to invest and manage the money.
The lawsuits focus on so-called revenue sharing deals, in which the mutual funds chosen for corporate 401(k) plans return a percentage of the management and investment fees they earn to the outside administrators who run the plans and determine which funds will be offered.
These revenue sharing arrangements were not disclosed to participants, the suits allege, and the costs charged for them have far exceeded what is reasonable to manage the accounts.
Suits Claim Excessive 401(k) Fees at 7 Firms
By Kathy M. Kristof Times Staff Writer
September 26, 2006
Seven of the nation's largest companies violated pension laws by allowing their employees to be overcharged by the outside firms running their 401(k) retirement plans, according to a series of civil lawsuits.The employees were charged millions of dollars in excessive management fees, which often were hidden in obscure agreements and not disclosed to the workers, the suits allege."At best, these fee structures are complicated and confusing when disclosed to plan participants," claim all the suits, which were filed this month by attorney Jerome Schlichter in federal district courts in Illinois, California, Connecticut and Missouri. "At worst, they are excessive, undisclosed and illegal."
"In its Retirement at Risk series last spring, The Times reported that hidden fees were quietly eroding the 401(k) nest eggs held by 44 million American workers, and that many companies pay little attention to the costs. Employee benefits experts say suits targeting 401(k) costs are rare but could become more common as companies increasingly scale back their traditional pension plans — making earnings from 401(k)s more crucial
In 401(k) plans, employees contribute a portion of their earnings to an investment fund, often with a matching contribution from their employer. The employee is typically given the option of investing in a variety of mutual funds, which charge fees to invest and manage the money.
The lawsuits focus on so-called revenue sharing deals, in which the mutual funds chosen for corporate 401(k) plans return a percentage of the management and investment fees they earn to the outside administrators who run the plans and determine which funds will be offered.
These revenue sharing arrangements were not disclosed to participants, the suits allege, and the costs charged for them have far exceeded what is reasonable to manage the accounts.
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