Aon has agreed to pay $4.5 million to settle an ERISA complaint in its role as an investment manager for Centerra Group, according to a document filed Oct. 27 by lawyers representing the company and plaintiffs who sued Centerra and Aon.
Centerra is not part of the settlement agreement, which requires court approval, in the case of Williams et al. vs. Centerra Group LLC et al.
The settlement affects all participants and beneficiaries of Centerra' 401(k) plan from July 1, 2016 through Jan. 1, 2019. "Aon Hewitt disputes these allegations and denies liability for any alleged fiduciary breach," said the document filed in a U.S. District Court in Aiken, S.C.
Aon was known as Aon Hewitt Investment Consulting when the firm, Centerra and Centerra fiduciaries were sued by current and former 401(k) plan participants in December 2020.
Centerra and Aon requested the allegations be dismissed but a federal judge in Florence, S.C. ruled in September 2021 that most allegations could go to trial. One of those allegations was the fiduciaries' decision to replace a mutual fund target-date series with a collective investment trust target-date series from Aon.
The judge wrote that the plaintiffs had provided sufficient information to show that the Aon product was a poor-performing compared to the target-date series it replaced. The judge added that plaintiffs offered sufficient information to support their claim that Aon had a conflict of interest by offering its own investment product even though the target-date series was on the market for less than five years.
Centerra, which provides security services, is a subsidiary of Constellis, Herndon, Va.
According to the original complaint, Centerra's 401(k) plan had $350 million in assets as of Dec. 31, 2018. Effective Jan. 1, 2019, the plan's assets and participants were transferred to the Constellis 401(k) Plan, producing a plan with approximately $400 million in assets.