A proposed class action aims to represent more than 1,400 University of Tampa employees alleged to have paid over the past six years an estimated $3 million in retirement plan administrative fees, allegedly “more than 10 times” what they should be paying.
The 36-page lawsuit claims the administrative fees paid by University of Tampa retirement plan enrollees are “grossly excessive” and will continue to pile up absent intervention from the court.
According to the lawsuit, the university contracts with TIAA-CREF to provide administrative services for its 403(b) employee retirement plan. The case claims non-party TIAA “pockets the bulk of the excessive fees,” and has been able to charge such high amounts because the company’s fees are tethered not to any actual services it provides, but rather to a percentage of assets in the plan.
As the plan’s assets increase, so too do the administrative fees paid by proposed class members, the complaint alleges. The lawsuit says this type of fee arrangement, according to one commentator, is akin to “hiring a plumber to fix a leaky gasket but paying the plumber not on actual work provided but based on the amount of water that flows through the pipe.”
The defendant, i.e. the fiduciary of the plan, is bound by the Employee Retirement Income Security Act of 1974 (ERISA) to act prudently and in the interest of plan participants and beneficiaries, which includes ensuring that the plan’s expenses are reasonable, the lawsuit attests.
According to the case, it took the University of Tampa nearly 14 years to obtain a recordkeeping agreement with TIAA that “actually identified exactly what the Plan and its participants were being charged.” From 2006 through mid-2020, the school’s recordkeeping deal with TIAA, per the suit, lacked any details concerning the amounts charged for administrative services. During this period, TIAA’s fees “skyrocketed,” the case says, and the University of Tampa breached its statutory duty by failing to ensure plan participants were not shelling out excessive fees.
The lawsuit shares that numerous other cases have been filed nationwide over similar alleged conduct in the realm of retirement plan administrative fees. The common denominator, according to the case, is TIAA. From the complaint:
“This action is similar (but narrower in scope) to roughly twenty (20) separate lawsuits filed in federal district courts around the country. In each of these other lawsuits, like here, plaintiffs allege a university defendant breached ERISA fiduciary duties by allowing TIAA to collect excessive administrative fees from the university’s retirement plan. It appears, TIAA exploited its rich heritage of being a non-profit low-cost financial service provider and duped universities into excessive fee arrangements. But now university plan participants are fighting back and demanding that TIAA’s fees be reduced. It appears TIAA is willing to meaningfully reduce its fees if universities will just ask. By way of example, shortly after the University of Chicago was sued it announced to its plan participants that it renegotiated TIAA’s administrative fees, and that it successfully reduced fees on an annual basis by several million dollars.”
Per the suit, many of the universities who faced administrative-fee litigation settled the claims on a class-wide basis and lowered plan fees.
The University of Tampa, according to the plaintiff on behalf of the Tampa Defined Contribution Plan, has failed to leverage its “tremendous bargaining power” to benefit those participating in the plan.
The case aims to represent all participants and beneficiaries of the University of Tampa Retirement and Savings Plan from April 25, 2015 through the date of judgment.
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