Participants in a multiple employer plan managed by Pentegra Retirement Services Inc. filed a lawsuit against the company and fiduciaries alleging ERISA violations.
"Instead of carrying out its fiduciary duties, the (plan's) board knowingly allowed Pentegra to control plan administration for the purpose of collecting excessive fees," said the lawsuit filed Tuesday in a U.S. District Court in New York City.
"A systematic pattern of the plan paying excessive fees shows that the board and other plan fiduciaries failed to follow a reasonable process for monitoring, evaluating or controlling plan administrative fees," said the complaint in Khan et al. vs. Board of Directors of Pentegra Defined Contribution Plan et al. The plaintiffs are seeking class action status.
If the defendants "had followed a prudent process and otherwise complied with their fiduciary duties, they could have obtained reasonable administrative fees for similar services far lower than those they caused the plan to pay," the lawsuit said.
The plaintiffs also alleged that "from prior to 2014 until at least 2018, defendants failed to conduct any competitive bidding process for plan administrative services. A competitive bidding process ... would have produced reasonable plan fees."
In an email statement Friday, Robert D. Alin, the company’s first senior vice president and general counsel wrote: “To date, we have not been served but are aware of the complaint. We reject the claims and intend to mount a vigorous defense against them.”
According to the complaint, the plan had $2.1 billion in assets covering 27,227 participants as of Dec. 31, 2018.