Cigna was just added to an elite list that includes Caterpillar Inc., Bechtel Corp. and Kraft Foods Global, Inc. These are some of the major firms that recently found themselves on the wrong end of a 401(k) lawsuit.
As you know, the Department of Labor (DOL) has published rules to promote greater transparency when it comes to the administrative fees 401(k) participants are paying.
And recently, an increasing number of employers have been charged with saddling their employees with “unreasonable and excessive” 401(k) fees.
Cigna — along with Prudential Retirement Insurance and Annuity Co. — just became one of those companies.
Excessive fees, self-dealing and more
According to a class-action lawsuit that was started by a trio of its 401(k) participants, Cigna Corp. charged “unreasonable and excessive” fees to employees who were participants in its 401(k) plan.
The company also allegedly participated in prohibited transactions and prohibited transactions under ERISA, which violated its “fiduciary duty,” to Cigna’s 401(k) participants.
Among other things, the lawsuit stated that Cigna’s Retirement Business, which was made up of smaller subsidiaries and affiliates, acted as the plan’s investment manager, record-keeper and service provider to the company’s own retirement plan.
And, according to plaintiffs, Cigna’s 401(k) plan was made up of more than $2 billion in assets — and the majority of that was overseen by Cigna’s Retirement Business, which is “a serious breach of fiduciary duty.”
In the end, Cigna Corp., along with Prudential Retirement Insurance and Annuity Co., agreed to settle the lawsuit for $35 million.