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Mercedes-Benz Retirement Plan Breach of Fiduciary Duties ERISA Class Action

The Employee Retirement Security Income Act (ERISA) was intended to protect people who have private retirement plans with their companies. Those who are in charge of those plans have fiduciary duties towards the participants and beneficiaries, including a duty to make sure the fees and expenses of those plans are reasonable. This class action brings suit against defendants Mercedes-Benz International, Inc., its board of directors, and its retirement plan committee over their handling of the Mercedes-Benz International, Inc. Retirement and Savings Plan.

The class for this action is all participants and beneficiaries of the Mercedes-Benz US International, Inc. Retirement and Savings Plan, between January 1, 2015 and the date of judgment in this case.

The complaint displays a table comparing plan results for an account in which a person deposited $100,000 with a 4% rate of return over twenty years. The three different-colored lines show the results at the end of the twenty years if the annual fees were 1.00%, 0.50%, and 0.25%. The highest return was $210,000 and lowest was $180,000, or $30,000 less.

The complaint says, “This difference is substantial.” However, it claims that the impact of excessive fees on defined contribution participants (like people with 401(k) plans) is even larger, “given that during most of the past three decades the returns of defined contribution participants have average almost double (7%)” the 4% return chosen for this example.

High fees and expenses can lower the amount in the plan account in two ways: first, by the amount actually taken out of the account to pay the fees and expenses; and second, because that amount, if it had been left in the account, would have continued gain interest and value over the years.

The defendants are fiduciaries of the retirement plan because they have discretionary authority or control over the plan. Under ERISA, fiduciaries must exercise the duties of prudence and loyalty. They are required, the complaint says, “to perform their obligations solely in the best interests of the plan’s participants and beneficiaries.”

The Mercedes-Benz plan is large, the complaint says, “larger than 99.60% of defined contribution plans in terms of numbers of participants and 99.83% in terms of assets…”

The market for services for such plans is competitive, the complaint says: “Because there was more than $500 million in assets in the Plan…, the Plan had tremendous bargaining power to demand low-cost administrative and investment management services.”

But instead of using this bargaining power, though, the complaint claims that the defendants paid “unreasonable and excessive fees” for the services. In the period under consideration in this case, the charges ranged between $239 and $567 per participant. According to the complaint, reasonable fees during this period for such a large plan were around $53 per participant. The complaint also charges that the plan paid over $300,000 in 2016 for investment advisory services when a reasonable cost was around $100,000.

Article Type: Lawsuit
Topic: News

Most Recent Case Event

Mercedes-Benz Retirement Plan Breach of Fiduciary Duties ERISA Complaint

January 15, 2021

The Employee Retirement Security Income Act (ERISA) was intended to protect people who have private retirement plans with their companies. Those who are in charge of those plans have fiduciary duties towards the participants and beneficiaries, including a duty to make sure the fees and expenses of those plans are reasonable. This class action brings suit against defendants Mercedes-Benz International, Inc., its board of directors, and its retirement plan committee over their handling of the Mercedes-Benz International, Inc. Retirement and Savings Plan.

Mercedes-Benz Retirement Plan Breach of Fiduciary Duties ERISA Complaint

Case Event History

Mercedes-Benz Retirement Plan Breach of Fiduciary Duties ERISA Complaint

January 15, 2021

The Employee Retirement Security Income Act (ERISA) was intended to protect people who have private retirement plans with their companies. Those who are in charge of those plans have fiduciary duties towards the participants and beneficiaries, including a duty to make sure the fees and expenses of those plans are reasonable. This class action brings suit against defendants Mercedes-Benz International, Inc., its board of directors, and its retirement plan committee over their handling of the Mercedes-Benz International, Inc. Retirement and Savings Plan.

Mercedes-Benz Retirement Plan Breach of Fiduciary Duties ERISA Complaint
Tags: Breach of Fiduciary Duty, ERISA Violations, Excessive Fees