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July 20, 2023 at 10:32 PM
What You Need to Know
- The suit involves a plan with 260,000 participants and $5 billion in assets.
- All judges on the 4th Circuit panel agreed that Aon provided prudent investment advice.
- Part of the case hinged on concerns about cross-selling.
A federal appeals court has sided with an arm of Aon in connection with a class-action suit involving the Lowe’s 401(k) Home Improvement employees’ 401(k) plan.
A three-judge panel at the U.S. Court of Appeals for the 4th Circuit ruled 2-1 earlier this week that Aon did not breach its fiduciary duties to plan participants under the Employee Retirement Income Security Act when it was cross-selling delegated fiduciary services to the plan while also providing investment consultant services to the plan.
When Aon helped Lowe’s put $1 billion of the plan assets in an Aon investment trust, it used a reasoned decision-making process to review comparable funds, continued to monitor the fund, and did not violate the ERISA fiduciary duty of prudence, according to an opinion written by Circuit Judge Julius Richardson.
Aon welcomed the ruling on the case, Reetz v. Aon Hewitt Investment Consulting (Case Number 21-2267). “We are pleased the appellate court has affirmed the trial court’s decision in our favor as we continue to help our clients maximize their employees’ retirement savings,” the company said in a statement.
Representatives for the plan participants and for Lowe’s could not immediately be reached for comment.
The Plan
The Lowe’s plan manages about $5 billion in assets for 260,000 plan participants.
The company committee in charge of overseeing the plan hired Aon to be the plan investment consultant in 2008. In that role, Aon owed the plan fiduciary duties, according to the appellate court ruling.
Plan Details
In 2014, Aon investment consultants were helping the Lowe’s plan overhaul its investment fund menu while an Aon sales team was trying to sell the committee delegated fiduciary services. A delegated fiduciary services provider assumes primary responsibility for managing a client’s plan.
