John Hancock 401(k) Plan Management ERISA Class Action

Those who manage retirement plans have a fiduciary duty to plan participants. This means that they must act in the interest of the plan participants and beneficiaries. The complaint for this class action alleges that those managing the John Hancock Life Insurance Company (USA) acted in the interests of the company instead, by inappropriately favoring its investment products.

The class for this action is all those who were participants or beneficiaries of the Incentive-Investment Plan for John Hancock employees at any time on or after February 27, 2014. Persons with responsibility for the plan’s investment or administrative functions are excluded.

The Employee Retirement Income Security Act of 1974 (ERISA) governs retirement plans offered by large companies to their employees. The complaint quotes federal law as saying that fiduciaries must act “solely in the interest of the participants and beneficiaries” with the “care, skill, prudence, and diligence” that would be expected of the management of a plan of a similar scope.

John Hancock’s plan is one of the largest 401(k) plans in the country, the complaint says, with between $1.4 billion and $1.8 billion in assets and more than 9,000 participants.

It therefore would be expected to offer a good array of investment products with attractive terms. However, the complaint alleges that the company “used the Plan … to promote John Hancock’s proprietary financial products and earn profits for John Hancock.” Startlingly, the complaint claims that “throughout the class period, [John Hancock] has offered only John Hancock investment products within the plan.”

Instead, the complaint claims, the managers of the plan should “objectively evaluate the Plan’s options in an unbiased manner [and] consider whether participants would be better served by other investment alternatives in the marketplace.”

The complaint faults the Plan managers for not doing enough to keep administrative costs down. According to the complaint, the company “failed to prudently and loyally monitor the Plan’s administrative expenses, and instead allowed the Plan to pay over three times what a prudent and loyal fiduciary would have paid for such services.” The complaint says these payments were “made in the form of ‘revenue sharing’ payments coming directly from the investment fees charged to the Plan for investing in John Hancock mutual funds, result[ing] in millions of dollars in additional losses to the Plan and its participants during the class period.”

Other objections to the John Hancock products, the complaint says, is their “poor performance” and “lack of traction among fiduciaries of similarly-sized plans.” The complaint provides some statistics to support this allegation and tables comparing the John Hancock products to others available in the marketplace.

Article Type: Lawsuit
Topic: Investments

Most Recent Case Event

John Hancock 401(k) Plan Management ERISA Complaint

February 27, 2020

Those who manage retirement plans have a fiduciary duty to plan participants. This means that they must act in the interest of the plan participants and beneficiaries. The complaint for this class action alleges that those managing the John Hancock Life Insurance Company (USA) acted in the interests of the company instead, by inappropriately favoring its investment products.

John Hancock 401(k) Plan Management ERISA Complaint

Case Event History

John Hancock 401(k) Plan Management ERISA Complaint

February 27, 2020

Those who manage retirement plans have a fiduciary duty to plan participants. This means that they must act in the interest of the plan participants and beneficiaries. The complaint for this class action alleges that those managing the John Hancock Life Insurance Company (USA) acted in the interests of the company instead, by inappropriately favoring its investment products.

John Hancock 401(k) Plan Management ERISA Complaint
Tags: Breach of Fiduciary Duty, ERISA Violations, Retirement Plan Mismanagement, Retirement Plans