Safeway Inc., Pleasanton, Calif., and the record keeper of its 401(k) plan, Empower Retirement, are being accused in a class-action lawsuit by some participants of the plan of charging excessive fees.
In a lawsuit filed Aug. 26 in U.S. District Court in Oakland, Calif., the plaintiffs said Safeway and Empower Retirement breached their fiduciary duties by selecting a target-date fund lineup managed by J.P. Morgan Asset Management that “charged excessive fees as compared to readily available alternatives,” the filing said. JPMAM is not a defendant in the lawsuit.
The lawsuit also alleges a large portion of those fees was “kicked back” to Empower Retirement to “compensate” Empower for their record-keeping services. The plan's predecessor record keeper was J.P. Morgan Retirement Plan Services before that provider's purchase by Great-West Financial that resulted in the creation of Empower Retirement in 2014.
As of Dec. 31, 2014, the Safeway 401(k) Plan had $1.9 billion in assets, according to the company's most recent Form 5500 filing. The amount in target-date funds could not be learned by press time.
Todd M. Schneider, partner at law firm Schneider Wallace Cottrell Konecky Wotkyns, attorney for the plaintiffs; officials at Safeway; and Stephen Gawlik, Empower Retirement spokesman, could not be immediately reached to provide comment.