Participants representing two 401(k) Plans have filed a lawsuit against Principal Global investors and appropriate parties, alleging fiduciary breaches in the selection and monitoring of the underlying investment options within the target date funds offered within their respective Plans – the Principal LifeTime Hybrid Collective Investment Trusts (CITs). Determination of underlying funds is within the fiduciary duties of the CITs’ management, as stated within the Declaration of Trust and sales literature for the Principal CIT products. With regard to underlying index products specifically, there are more competitively priced funds available in the marketplace other than the proprietary Principal index products populating the Principal LifeTime Hybrid CITs, which are “five to fifteen times” higher than marketplace alternatives. The defendants’ failure to use better performing, less expensive index products cost the participants millions in investment losses compared to what would have been earned if fiduciaries acted in accordance with fiduciary obligations. Many target date offerings managed by other investment management firms invest in non-proprietary index funds. Plaintiffs also claim that Principal intentionally selected expensive share classes of their proprietary actively-managed products as a means to boost investment revenue.
wwww.planadviser.com; April 20, 2018.