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Regulation and Compliance > Litigation

John Hancock Charged Excessive 401(k) Fees, Suit Claims

By Melanie Waddell

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The Danish international container shipping company Maersk is a facing a class-action lawsuit from participants in its 401(k) plan for “execessive” fees charged by the plan’s recordkeeper, John Hancock Retirement Plan Services.

The suit, filed in the U.S. District Court for the Western District of North Carolina, states that Maersk breached its fiduciary duty by requiring the plan to pay excessive recordkeeping and administrative fees and by failing to remove the John Hancock retirement plan arm as recordkeeper despite the costs.

Maersk also “egregiously” failed to monitor the company 401(k)’s total RK&A fees paid to John Hancock, according to the suit.

John Hancock has been the recordkeeper of the plan for eight years or more, the suit states.

The suit alleges a breach of the fiduciary duty of prudence and loyalty by Maersk’s pension committee for “incurring unreasonable and discriminatory” total RKA fees.

The pension committee paid a premium of more than 305% per participant for total RKA fees during the class period, according to the suit.

The pension committee “should have lowered its Total RKA fees by soliciting bids from competing providers and using its massive size and correspondent bargaining power to negotiate for fee rebates, but it did not do so, or did so ineffectively, during the Class Period,” the suit states.

The “quality or type of RKA services provided by competitor recordkeepers are comparable to that provided by John Hancock,” the suit maintains. “Any differences in these Bundled RKA services are immaterial to the price quoted by recordkeepers for such services. Failing to adjust fee arrangements, solicit bids, or negotiate for rebates with existing recordkeepers, violates a fiduciary’s duty of prudence under ERISA.”

The suit alleges a breach of fiduciary duty by Maersk and its board “for failing to monitor those members of the Pension Committee responsible for paying these unreasonable and discriminatory” fees.

These breaches of fiduciary duty “caused Plaintiff and Class Members millions of dollars of harm in the form of lower retirement account balances than they otherwise should have had in the absence of these unreasonable Plan fees,” the suit states.

Image: Shutterstock

Melanie Waddell

@Think_MelanieW

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