Milliman Retirement Plan Underperforming Investments Class Action

Those in charge of company retirement plans are considered fiduciaries of those plans, and they have the duties of loyalty and prudence to plan participants. One of the things they must do is monitor the investment options offered in the plan. This class action brings suit against Milliman, Inc., its Board of Directors, and the Investment and Administrative Committees for the company’s Profit Sharing and Retirement Plan under the Employee Retirement Income Security Act (ERISA), alleging they have breached their fiduciary duties by retaining investment options that are significantly underperforming.

The class for this action is all participants and beneficiaries of the Milliman plan who invested in any of the Unified Funds, between January 13, 2016 through the date of judgment in this case.

According to the complaint, the Investment Committee selected for the plan three funds that are designated according to their levels of risk: the Unified Trust Wealth Preservation Strategy Target Growth Fund (the most aggressive), the Unified Trust Wealth Preservation Strategy Target Moderate Fund (an option intended to pose a more moderate risk), and the Unified Trust Wealth Preservation Strategy Target Conservative Fund (the one that poses the least risk of the three).

These funds come from the Unified trust Company and allocate invested assets among equity securities, bonds, and cash investments according to the desired levels of risk. (Higher levels of risk are usually associated with higher expected levels of return.) These funds were only launched in 2012, so when they were offered in the plan in 2013, they were still new and had no investment track record, the complaint alleges.

The complaint claims, “By the end of 2013, the Plan was the sole investor in the Moderate and Conservative Funds and represented about 97% of the assets of the Aggressive Fund, according to Department of Labor (‘DOL’) filings.” It adds, “Milliman’s investment adviser affiliate, Milliman Financial Risk Management LLC, is the sub-adviser to the Unified Funds offered by the Plan.”

The complaint alleges that in the years since, the plans have “significantly underperformed meaningful benchmarks, which include both benchmark indexes (including the index preferred by the Unified Funds’ investment manager itself) and comparable target risk funds.” The almost consistent underperformance is not the whole story; the complaint claims that “the depth and breadth of the underperformance is as jarring as it is incomprehensible.”

The complaint alleges, “Since January 1, 2013, the Aggressive Fund’s investment return underperformed a key investment benchmark by a cumulative total of over 62%; and it ranks in the bottom 90th percentile among the funds in its peer universe, according to the highly regarded financial services research firm, Morningstar, Inc…. In the investment world, this level of underperformance cannot be justified.”

It adds, “Over the last five-year period, the three Unified Funds have performed worse than 70% to 90% of funds within their recognized peer universe, according to Morningstar.”

According to the complaint, these funds should have been removed from the plan as investment options and replaced with better-performing alternatives.

Article Type: Lawsuit
Topic: Employment
Tags: ERISA Violations, Investments, Retirement Plans