Like the smart students who win all the year-end awards, Schlichter, Bogard & Denton announced last week that its $27.5 million settlement, on behalf of Ameriprise employees and retirees in the 401(k) excessive fee case, Krueger v. Ameriprise Financial, has been approved by the Court.
The announcement comes on the heels of the St. Louis-based firm’s Tibble v. Edison International win, as well as the approval of an historic amount for Lockheed Martin 401(k) participants, which was also announced last week.
“We are pleased that the settlement, achieved on behalf of Ameriprise employees and retirees, is approved”
“We are pleased that the settlement, achieved on behalf of Ameriprise employees and retirees, is approved,” Jerome Schlichter, founding and managing partner at Schlichter, Bogard & Denton, said in a statement. “The financial terms reached and non-monetary relief obtained will benefit current and future Ameriprise employees and retirees. They will be able to build and enhance their retirement savings in the future.”
An estimated 46,200 current and former Ameriprise employees are members of the class in this action and have received a Settlement Notice in the mail. Schlichter, Bogard & Denton originally filed the complaint over three and a half years ago.
The parties filed a joint motion for approval of the settlement on March 20, 2015 with Judge Susan Richard Nelson of the United States District Court for the District of Minnesota, who approved the settlement. The settlement’s non-monetary relief provisions, some of which have already been adopted by Ameriprise, enhance the Ameriprise 401(k) plan and set the standard for best practices for corporate plan sponsors.
Originally filed on September 28, 2011, the plaintiffs alleged that Ameriprise breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA), by failing to ensure that the recordkeeping and management fees and expenses paid out of the assets in the plan were reasonable. Additionally, they alleged that the plan’s fiduciaries breached their fiduciary duties in selecting and retaining proprietary investment options.
Ameriprise denied all of the allegations, and contended that the fees were reasonable. It also contended that it complied in all respects with the law and did not commit any fiduciary breaches.
In the settlement, Ameriprise has agreed to terms designed to strengthen and add value to its 401(k) plan as part of the non-monetary relief provisions. Under the provisions, Ameriprise has agreed to conduct a request for proposal competitive bidding process for recordkeeping and investment consulting services; will pay flat fees to the plan record-keeper or on a per participant basis; and limits in compensation for administrative services provided to the plan and other reimbursement of expenses from the plan. Ameriprise must provide participant statements that comply with all applicable Department of Labor regulations; and consider the use of less expensive collective investment trusts or separately managed accounts. The Court will retain jurisdiction to monitor compliance for three years.