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Pioneer Natural Resources sued over expensive investment options in 401(k) plan

A participant in the 401(k) plan of Pioneer Natural Resources sued plan executives, alleging they violated their fiduciary duties under ERISA by choosing unnecessarily expensive investment options and failing to conduct "competent" annual reviews of the investment lineup to monitor costs and performance.

"Instead of leveraging the plan's bargaining power to benefit participants and beneficiaries, the Pioneer defendants chose inappropriate, higher-cost mutual fund shares classes," said the June 28 complaint filed in U.S. District Court in Denver on June 28, in the case of Barrett vs. Pioneer Natural Resources USA Inc. et al. These actions "caused the plan to pay unreasonable and excessive fees for record keeping and other administrative services."

The complaint said the Pioneer Natural Resources USA Inc. 401(k) and Matching Plan had $500.2 million in assets as of Dec. 31, 2015. Pioneer Natural Resources USA Inc. is a wholly owned subsidiary of Pioneer Natural Resources Co., Irving, Texas.

Plaintiff William Barrett, who is seeking class-action status, said in his complaint that plan executives should have selected lower-price share classes for a variety of Vanguard Group investment options instead of offering higher-cost investor shares.

"The Pioneer defendants had no competent annual review or other process in place to fulfill their continuing obligation to monitor plan investment choices for performance or to minimize expenses, or in the alternative failed to follow their own processes," the complaint said.

Mr. Barrett also argued that plan executives should have invested in Vanguard collective investment trusts that were available for certain mutual funds in the plan's lineup. "Despite the availability of lower-cost collective trust target-date funds from the same investment manager, Vanguard, the Pioneer defendants continue to offer higher-cost investor class mutual funds to plan participants," said the complaint filed by law firm Franklin D. Azar & Associates.

Robert Bobo, a Pioneer spokesman, did not respond to requests for comment by press time.