A former participant in a Duke Energy Corp. 401(k) plan sued the company and plan fiduciaries alleging they violated ERISA rules in managing the plan.
The plaintiff argued that the Duke plan paid record-keeping fees that were well above "competitive marketplace rates," according to the complaint filed Wednesday in U.S. District Court in Charlotte, N.C.
The 401(k) plan has had the same record keeper "for at least the past decade, and the fees remained "roughly the same between 2014 and 2018 while marketplace rates were dropping," the former participant alleged.
"This gives rise to the inference that defendants failed to monitor record-keeping compensation during that period and failed to solicit competitive bids from other record keepers that would have resulted either in retention of a new record keeper or a significant reduction in the rates paid to its existing record keeper," said the complaint in the case of Johnson vs. Duke Energy Corp. et al.
Fidelity Investments is the record keeper; it was not named as a defendant in the lawsuit, which seeks class action status.
"Duke Energy's retirement savings plan has been carefully designed and administered as a retirement savings tool for the company's 29,000 employees, David Scanzoni, a company spokesman wrote in an email. "The company will vigorously defend against this lawsuit."
The complaint also alleged that the plan has paid "excessive" fees for a managed account service provided by what is now called Edelman Financial Engines. Edelman isn't a defendant.
The complaint blamed fiduciaries for causing the plan "to pay significantly more for managed account services than other plans pay for identical services." Even though managed account services fees were reduced in 2019, "it is still excessive given the industry trends for managed account services and the enormous leverage the plan enjoys in the market place," the complaint said.
The Duke Energy Retirement Savings Plan, Charlotte, N.C., had assets of $8.17 billion as of Dec. 31, 2018, according to the latest Form 5500.