Participants in the CHS/Community Health Systems, Inc. Retirement Savings Plan allege that the retirement plan committee, Principal Life Insurance Company and associated Principal entities breached fiduciary duties of loyalty and prudence with regard to management of the Plan and its investments. At issue in this case are index funds offered within the plan as stand-alone options, as well as underlying options within the Plan’s target date fund offerings. First, plaintiffs allege that the CHS defendants breached fiduciary duties by selecting and then failing to remove excessively expensive and poor performing Principal index funds. CHS should have given consideration to the many competitive index funds available in the marketplace, those with better performance (tracking of respective indices) and lower fees. Failure to do so, and further, failure to remove the inadequate funds from the menu caused millions of dollars in fees and losses to participants’ retirement savings. Additionally, these Principal index funds were underlying investments in the target date separate account portfolios also offered in the investment menu, as well as higher fee Principal funds, when other less expensive share classes were available. On this basis, Principal is accused of self-dealing conduct in the management of these target date portfolios, given the portfolios’ underlying fund composition, and CHS is accused of a fiduciary breach in its failure to address Principal’s mismanagement in this regard.
www.planadviser.com; August 27, 2019.