Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • SECURE 2.0
    • Special Reports
    • Washington
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • 2023 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2023 Defined Contribution East Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Canadian Pension Risk Strategies
    • 2023 Retirement Income
Breadcrumb
  1. Home
  2. COURTS
May 25, 2017 01:00 AM

University of Chicago sued by DC plan participants for breaching fiduciary duty

Meaghan Offerman
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    The University of Chicago is the latest university to be sued for allegedly breaching its fiduciary duties by charging participants excessive fees and investing their retirement assets in high-cost and poor-performing funds.

    Similar to allegations brought against a number of universities last year, plaintiffs in the University of Chicago lawsuit allege the university “failed to adequately investigate, examine and understand the real cost to plan participants for administrative services, thereby causing the plans and participant investors to pay grossly excessive and unreasonable (administrative) fees.”

    The lawsuit further argues that the university failed in its duties to monitor the plans’ investment choices and retained certain investment options that “historically and consistently underperformed their benchmarks and charged excessive fees.”

    In aggregate, the University of Chicago Contributory Retirement Plan and University of Chicago Retirement Income Plan for Employees have more than $3 billion in assets and offer more than 115 investment options managed by Vanguard Group and TIAA-CREF. Plaintiffs pointed to the “dizzying array” of more than 115 investment options as an example of the university’s allegedly “flawed” decision-making process.

    Other examples cited by plaintiffs were the selection of TIAA Traditional Annuity as the plans’ principal capital preservation fund.

    According to plaintiffs, investors in TIAA Traditional Annuity were prohibited from redirecting their investment into other investment options during their employment except in 10 annual installments, “effectively denying participants the ability to invest in equity funds and other investments as market conditions or participants’ investment objectives changed.” The TIAA Traditional Annuity option also prohibited participants from receiving lump-sum distributions of their amount invested “unless they paid a 2.5% surrender charge that bore no relationship to any reasonable risk or expense to which the fund was subject,” plaintiffs alleged.

    Another example of U of C’s “flawed process,” plaintiffs argued, was the inclusion of a TIAA loan program “that required excessive collateral as security for repayment of the loan, charged grossly excessive fees for administration of the loan, and violated U.S. Department of Labor rules for participant loan programs.”

    The lawsuit was filed May 18 in U.S. District Court in Illinois by law firms Wexler Wallace; Schneider Wallace Cottrell Konecky Wotkyns; and Berger & Montague.

    Responding to the lawsuit, a TIAA spokesman said: “TIAA stands firmly behind its offer of high-quality products and services with strong long-term performance and reasonable costs, providing lifetime income for millions of participants. We believe the allegations reflect a fundamental lack of understanding of TIAA’s products and services and the ways we serve participants.”

    A University of Chicago spokeswoman said in an emailed statement that the university “provides its employees with carefully managed benefits programs, including retirement plans, which offer a diverse selection of investment options,” and that is in the process of reviewing the lawsuit.

    Related Articles
    Fitch lowers Illinois' credit rating to BBB
    Illinois State Universities preps passive manager search
    Illinois governor vetoes bill to help improve funding ratio for 2 Chicago pensi…
    Princeton becomes latest university sued over alleged fiduciary breaches in DC …
    University of Chicago moves to one record keeper, consolidates lineups for 4 DC…
    Georgetown sued for allegedly violating fiduciary duties in its 403(b) plans
    University of Chicago settles with 403(b) participants over alleged ERISA viola…
    Recommended for You
    gavel_scales_lawbook_1550-main_i.jpg
    Judge allows Knight-Swift 401(k) lawsuit to proceed
    Wake_Forest_Baptist_Medical_Center_i.jpg
    Wake Forest medical center agrees to settle 403(b) dispute
    OReilly-Auto-main_i.jpg
    Judge scraps 401(k) lawsuit against O'Reilly Automotive
    Quest for Quality Amid Market Turmoil
    Sponsored Content: Quest for Quality Amid Market Turmoil

    Reader Poll

    May 1, 2023
     
    SEE MORE POLLS >
    Sponsored
    White Papers
    Counting on a Crisis: A Catalyst for Investment Innovation?
    A Strategic Allocator's Guide to Productivity and Profits
    Biodiversity: why investors should care
    Research for Institutional Money Management
    Targeting Impact with Indexes
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • SECURE 2.0
      • Special Reports
      • Washington
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • 2023 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2023 Defined Contribution East Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Canadian Pension Risk Strategies
      • 2023 Retirement Income