The International Union of Elevator Constructors has agreed to pay $5 million to settle allegations by two participants in its 401(k) plan that plan managers charged excessive record-keeping fees and failed to select lower-cost, better-performing investments.
A settlement notice was filed Aug. 22 by plaintiffs’ attorneys in a U.S. District Court in Philadelphia in McLachlan et al. vs. the Board of Trustees of the Elevator Constructors Annuity and 401(k) Retirement Plan.
The class-action settlement, which was achieved via mediation, must be approved by the court.
The union offers this retirement plan to many unions throughout the country, making it a multiple employer plan, according to the original lawsuit filed in October 2022. The plaintiffs' employers were not identified.
A federal judge in Philadelphia in June 2023 rebuffed the union’s request to dismiss the allegations of ERISA violations.
The proposed class-action settlement eliminates “the risks and cost of trial,” the document said. “A trial could result in a reduced recovery or no recovery at all.”
In addition to the $5 million, the settlement agreement called for the sponsor to complete a record-keeping RFP that is “currently underway,” adding that the sponsor “will continue to conduct periodic RFPs.”
The Elevator Constructors Annuity and 401(k) Retirement Plan, Newtown Square, Pa., had $5.2 billion in assets as of Dec. 31, 2022, according to the latest Form 5500, which said the plan has 32,318 active participants.
