Columbia University, New York, agreed to pay $13 million and make several plan management changes to settle an ERISA complaint by participants in two university retirement plans.
The terms were disclosed May 21 in a document filed with a U.S. District Court judge in New York, who must approve the agreement. The parties had announced a preliminary settlement in April but didn't disclose the terms at that time.
The April announcement came less than a week before a trial was scheduled to begin in the case of Cates et al. vs. The Trustees of Columbia University et al. The complaint represented the consolidation of two lawsuits initially filed in August 2016, and the class-action complaint covers participants from Aug. 10, 2010, through the date of judgment.
Major complaints against the university and fiduciaries included the charging of "unreasonable" record-keeping fees and retaining poor-performing investments for the two 403(b) plans.
"Although the university does not agree with any of the allegations made in this case, we are pleased to be able to put this litigation behind us," the university wrote in an email statement.
Settling the complaint will enable Columbia "to continue to focus on providing university employees with quality plans that provide them the opportunity to build individualized retirement portfolios that are diversified and suit their individual needs," the statement said.
Plaintiffs' attorney Jerome Schlichter said the non-monetary terms will provide "significant" plan improvements in the future. "These key changes will enable Columbia employees and retirees to build their retirement assets for many years to come," Mr. Schlichter said in a news release issued May 21. He is founding and managing partner of Schlichter Bogard & Denton.
Among the non-monetary terms, the university agreed to are:
- Instruct current record keepers in writing within 90 days of the effective settlement date that they cannot use plans' data to cross-sell non-plan products and services to participants unless requested by participants.
- Issue an RFP, before the end of the three-year settlement period, for the plans' record keeping and administrative services. The document noted that the university "is in the course of negotiating revised contracts for record keeping and administrative services."
- Continue providing annual training to the plans' fiduciaries about their ERISA responsibilities.
- Inform participants "of their ability to redirect their assets held in any frozen investment options to investment options available in the updated investment menu."
As of Dec. 31, 2019, the Retirement Plan for Officers of Columbia University had $4 billion in assets, and the Columbia University Voluntary Retirement Savings Plan had assets of $3 billion, both according to the latest Form 5500s.
