Northern Trust Retirement Plan Poorly-Performing Options Class Action

Company retirement plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA). This includes the Northern Trust Company Thrift-Incentive Plan. This class action brings suit against the Northern Trust Company, its Employee Benefit Administrative Committee, and the Committee’s members, alleging that they have breached their fiduciary duties under the plan.

The class for this action is all participants and beneficiaries of the Plan who invested in the Northern Trust Focus Target Retirement Trusts between November 2, 2014 and December 31, 2019.

Which fiduciary duty have the defendants violated? According to the complaint, they did not exercise prudence or loyalty in assigning the investment options for the fund. The complaint claims they failed to monitor the investment options and did not remove the ones that had “become imprudent.” The complaint says the company and committee “loaded the plan with poorly performing proprietary funds called the Northern Trust Focus Target Retirement Trusts …, and then kept these Funds on the Plan’s investment menu throughout the Class Period despite their continued underperformance.”

These trusts were “target date funds” intended to invest money and achieve results based on the participants’ intended retirement dates. According to the complaint, these types of funds have become very popular and the defendants “have hundreds of different target date funds to choose from when selecting target date options for their plans.”

The Northern Trust Focus Funds were, not good choices, the complaint says: They “have significantly underperformed their benchmark indices and comparable target date funds since Northern Trust launched them in 2010. For nearly a decade, the Northern Trust Focus Funds have performed worse than 70% to 90% of peer funds.”

Not only have the defendants declined to remove them from its retirement plan options, they have made these funds the default options for participants who don’t choose another option.

How much have these poor investments cost participants? The complaint says, “Based on an analysis of data compiled by Morningstar, Inc., [the plaintiff in this class action] projects the Plan lost upwards of $34 million in retirement savings since 2014 because of Defendants’ decision to retain the Northern Trust Focus Funds in the Plan instead of removing them.”

The complaint displays charts showing the performance over time of the Northern Trust funds, from a 2010 fund on up to a 2055 fund. It then compares those performances with the performances of similar investment options from other companies, such as Vanguard and T. Rowe Price. The Northern Trust funds have performed very poorly compared to the other funds.

Article Type: Lawsuit
Topic: News

Most Recent Case Event

Northern Trust Retirement Plan Poorly-Performing Options Complaint

November 2, 2020

Company retirement plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA). This includes the Northern Trust Company Thrift-Incentive Plan. This class action brings suit against the Northern Trust Company, its Employee Benefit Administrative Committee, and the Committee’s members, alleging that they have breached their fiduciary duties under the plan.

Northern Trust Retirement Plan Poorly-Performing Options Complaint

Case Event History

Northern Trust Retirement Plan Poorly-Performing Options Complaint

November 2, 2020

Company retirement plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA). This includes the Northern Trust Company Thrift-Incentive Plan. This class action brings suit against the Northern Trust Company, its Employee Benefit Administrative Committee, and the Committee’s members, alleging that they have breached their fiduciary duties under the plan.

Northern Trust Retirement Plan Poorly-Performing Options Complaint
Tags: Breach of Fiduciary Duty, Retirement Plan Mismanagement, Retirement Plans