Several complaints have been alleged in this lawsuit against Brown University and the fiduciaries of the Brown University Deferred Vesting Retirement Plan and Legacy Retirement Plan, representing over $1 billion in assets. Fiduciaries are accused of failing to utilize their bargaining power to achieve low-cost administrative and investment management services, causing plan participants to incur excessive fees. Fiduciaries are also alleged to have populated the investment menus with an overabundance of funds – 175 options in the Legacy Retirement Plan, with 24 TIAA options and 177 options in the Deferred Vesting Retirement Plan, with 26 TIAA options. The funds have consistently underperformed their respective benchmarks, with excessive fees verses their lower fee comparable share classes that are available. Pursuant to TIAA, the lawsuit questions utilization of individual annuity contracts and the surrender fee of 2.5% associated with any installment payments from the TIAA contracts, as well as the TIAA loan program, requiring collateral as security for loan repayment, charging exorbitant fees for loan administration, and violating DOL rules regarding participant loan programs. The University hired multiple recordkeepers, instead of using a single recordkeeper as is the trend with 403(b) plans. Fund managers receive a percentage of the “assets as fees in exchange for services that single recordkeeper plans offer at a fixed cost.”
www.planadviser.com; July 10, 2017.
www.browndailyherald.com; September 20, 2017.