John Hancock Life Insurance Co. (U.S.A.) agreed to a $14 million settlement in a lawsuit filed by participants in a company 401(k) plan who alleged ERISA violations in the plan's management.
Terms of the settlement were disclosed in a court filing Tuesday in the U.S. District Court in Boston.
Lawyers for the company and plaintiffs had filed a notice April 21 reporting the agreement in principle in the case of Baker et al. vs. John Hancock Life Insurance Co. (U.S.A.) et al.
Under the agreement, the insurer will contribute $14 million to a qualified settlement fund, and participant class members' accounts will be credited with their share of that fund, the Tuesday filing shows.
The gross settlement amount represents about 0.76% of the 401(k) plan assets of about $1.85 billion reported as of Dec. 31, 2019, in the plan's most recent Form 5500 filing.
The settlement also provides an agreement that John Hancock will hire a third-party investment consultant to provide ongoing monitoring and review of the investment options for at least five years from the settlement effective date, will develop an investment policy statement for the plan, and hire a consultant to assist with issuing a request for information for record-keeping services.
The suit was originally filed in February 2020 and among the allegations were that the plan imposed high fees and offered proprietary John Hancock investment products to the exclusion of comparable investments that the plaintiffs alleged were better-performing and less expensive than the John Hancock offerings.
The plaintiffs, seeking class-action status, alleged that the ERISA violations started in 2014.