Packaging Corporation of America 401(k) Plan Fiduciary Duty ERISA Class Action

This class action concerns the Packaging Corporation of America Retirement Savings Plan for Salaried Employees. The complaint names the company (PCA), its Board of Directors, and its Benefits Administration Committee as defendants, alleging that they violated the Employee Retirement Income Security Act (ERISA) by letting the plan pay high recordkeeping and administrative fees, and by not properly monitoring investment options in the plan. The complaint alleges they thus violated their fiduciary duty of prudence.

The class for this action is all participants and beneficiaries of the Packaging Corporation of America Retirement Savings Plan for Salaried Employees, between March 23, 2016 and the date of judgement in this case.

The complaint first claims that the fiduciaries breached their fiduciary duty to the plan by allowing it to be charged “objectively unreasonable recordkeeping, managed account, and investment fees[.]”

Mega plans are plans that have more than $500 million in assets, the complaint claims. The PCA 401(k) plan in 2019 had more than a billion dollars in assets. The complaint alleges that such large plans have significant bargaining power in the market for recordkeeping and other administrative services (RKA services).

For plans like this, the complaint alleges, a bundled RKA fee is offered on a per-participant basis. The plan was paying an RKA fee of $80 per participant, the complaint claims. It offers a table to compare this to the RKA fees of comparable plans, which range from $20 to $48.

The complaint’s second claim is that the fiduciaries did not properly choose and monitor the plan’s investment options.

For one thing, it claims that large retirement plans can take advantage of different share classes that can save participants money. The complaint alleges, “A prudent plan fiduciary ensures that the plan selects the share class that provides the greatest benefit to plan participants given the institutional advantages provided to retirement plans in relation to retail investors.”

Fiduciaries must also consider the fees each investment option charges. The complaint claims, “A prudent fiduciary would have conducted periodic competitive solicitations (including issuing an RFP, if necessary, as well as evaluating the incremental value provided to Plan participants, to ensure that the amounts paid by the Plan for managed account services were reasonable.”

Also, once the investment options have been chosen, the complaint alleges, the plan fiduciaries must monitor them to ensure that they are performing adequately. If they are not, the complaint alleges that the fiduciaries have a duty to remove them and replace them with better-performing options.

Article Type: Lawsuit
Topic: Employment
Tags: Breach of Fiduciary Duty, ERISA Violations, Employment Violations, Retirement Plans