Dive Brief:
- The issue of excessive fees charged to retirement savings plans in the workplace is a growing hot button issue nationwide, and now a trio of big name universities have been taken to court over it.
- A number of employees seeking class-action status are suing the Massachusetts Institute of Technology (MIT), New York University (NYU) and Yale, which collectively have more than $3 billion in assets, according to the New York Times.
- Jerome J. Schlichter, who is representing the plaintiffs, specializes in and "is a pioneer" in retirement plan litigation, filing more than 20 lawsuits on behalf of workers in 401(k) retirement plans. His work, the Times reports, also has been credited with driving plan fees down nationwide.
Dive Insight:
Schlichter told the Times that it's "important for retirees and employees of universities to have the same rights and ability to build their retirement assets as employees of for-profit companies." In this case, the litigation focuses on 403(b) plans, which are similar 401(k) plans but are used by non-profit employers under the tax code.
All three schools had the same basic reaction: they will defend themselves in court, the Times reports.
The three cases are no surprise, as the Labor Dept. under the Obama administration has begun to crack down on investment plan administration fees in the recent past. These cases and others clearly show that it's no longer business as usual when it comes to retirement plans, especially now that the old-fashioned "defined benefit" retirement plan, funded by employers, is nearly extinct, largely replaced by the "defined contribution" model funded by employees, apart from matching employer funding.
Editor's Note: New complaints were filed in various federal courts on behalf of employees at Duke, Johns Hopkins, the University of Pennsylvania and Vanderbilt.