Participants in a University of Miami retirement plan have sued the university, alleging plan fiduciaries violated their ERISA duties by paying excessive administrative and investment fees, failing to remove poor-performing investments and failing to choose lower-cost share classes for the investment menu.
"The plan has tremendous bargaining power to demand low-cost administrative and investment management services, and well-performing investment funds," said the complaint filed Wednesday in a U.S. District Court in Miami.
"But instead of leveraging the plan's massive bargaining power to benefit participants and beneficiaries, defendant failed to investigate, examine and understand the real cost to plan's participants for administrative services," said the complaint in Santiago et al. vs. University Of Miami. As a result, the plan paid unreasonable and excessive fees for investment and administrative services."
The participants, who seek class-action status, said the university's 403(b) plan is both inefficient and expensive because it has six record keepers.
This system "has caused plan participants to pay and continue to pay duplicative, excessive and unreasonable fees for plan record keeping and administrative services," the lawsuit said. "There is no loyal or prudent reason for defendant's failure to engage in (a) process to reduce duplicative services and the fees charged to the plan or to continue with six record keepers to the present."
The lawsuit also accused the university of failing to prudently monitor and control payments for record keeping and administrative services. The plaintiffs argued that having more than 390 investment options created confusion and higher costs for participants.
"The University of Miami, on behalf of current and former faculty and staff, is committed to thoroughly and properly discharging its fiduciary obligations as the plan administrator for its retirement plans," the university said in an email. "The investment choices offered under the retirement plans are regularly reviewed and carefully managed in accordance with federal law."
The university is aware of the lawsuit but won't make additional comments due to pending litigation, the statement said.
The University of Miami Retirement Savings Plan, Coral Gables, Fla., had assets of $836.6 million as of Dec. 31, 2018, according to the latest Form 5500.