Schneider Electric Holdings Inc., Andover, Mass., has been sued by a group of current and former employees alleging that fiduciaries of the Schneider Electric 401(k) Plan committed a series of ERISA violations.
"Instead of using the plan's bargaining power to benefit participants and beneficiaries, the Schneider Electric defendants ... caused unreasonable expenses to be charged to the plan and participants for record keeping, investment management, and managed account services," said the complaint filed Tuesday in U.S. District Court in Boston.
"Instead of acting in the exclusive best interest of participants, the Schneider Electric defendants and Aon Hewitt selected and retained proprietary Aon Hewitt collective investment trusts that only benefited Aon Hewitt," said the complaint in which Aon Hewitt Investment Consulting, Schneider's former investment consultant, also is named as a defendant.
The plaintiffs also said the fiduciaries should not have retained Vanguard Group as the plan's record keeper "without properly monitoring and reducing the compensation paid to Vanguard from the plan, which came out of each participant's account," the complaint said.
"That excessive compensation includes payments that Vanguard received from providing managed account services," the document said. Vanguard isn't a defendant.
The participants also argued that the fiduciaries should have offered lower-cost shares of some investments in the plan's menu. If the plan had done so,"every participant's account would have had fewer investment management fees deducted and would have been of higher value in light of those fees and the investment return on those fees," the lawsuit said.
Nadine Youssef, an Aon Hewitt spokeswoman, wrote in an email that her company doesn't comment on litigation. A representative of Schneider Electric didn't respond to a request for comment.
As of Dec. 31, 2018, the Schneider Electric 401(k) Plan had assets of $3.7 billion, the lawsuit said.