PPL participants file suit on ‘unproven' target-date funds

Current and former employees of PPL Corp. have sued the company, a subsidiary and fiduciaries, alleging violations of ERISA in the management of four retirement plans.

"Instead of acting diligently and prudently, defendants retained a suite of unproven collective investment trust target date funds as investment options in the plans, known as the Northern Trust Focus Funds," said the complaint filed Jan. 12 in a U.S. District Court in Allentown, Pa.

"The Focus Funds suffered from significant and ongoing quantitative deficiencies and managerial turnover resulting in massive underperformance relative to that of well-established, prudently managed, comparable target date funds that were available to the plans," said the complaint in the case of Binder et al. vs. PPL Corp. et al.

The plaintiffs are seeking class action status. Northern Trust isn't a defendant.

"We are confident in the soundness of our retirement plans and believe the fees associated with those plans are reasonable," Ryan W. Hill, a PPL spokesman, wrote in an email. "We're confident we've acted lawfully and appropriately at all times. Any claims to the contrary are entirely without merit."

Mr. Hill added that the DC plans are administered by Fidelity Investments, "undergo a rigorous evaluation annually to compare costs and investment performance against industry benchmarks, and are regularly reviewed by an independent board to ensure they align with our investment policy and meet plan objectives."

Fidelity isn't a defendant.

The plans are the PPL Employee Savings Plan, PPL Deferred Savings Plan, PPL Employee Stock Ownership Plan, and the LG&E and KU Savings Plan. They are "overseen by the same fiduciaries and appointing fiduciaries and maintained, in all relevant respects, the same investment options available for participants," the complaint said.

The plans' assets are held in the PPL Defined Contribution Master Trust, Allentown, Pa. The combined assets were $2 billion as of Dec. 31, 2020, according to the latest Form 5500.

"Despite the plans' tremendous bargaining power to demand lower fees to benefit participants and beneficiaries through its massive assets, defendants selected and retained higher-cost investments of the Focus Funds when identically managed, yet lower-cost investments, were readily available," the complaint said.