Walgreen Co. and the respective administrators of its retirement plan and trust fund are facing a class action that claims the parties have robbed plan members of over $300 million in retirement savings by investing the money in underperforming funds.
Walgreen Co. is at the center of a proposed class action lawsuit that claims the pharmacy and the respective administrators of its retirement plan and trust fund have robbed plan members of over $300 million in retirement savings by investing the money in a suite of historically underperforming funds.
The case alleges that despite “a market teeming with better-performing alternatives,” Walgreens and its co-defendants chose to add the Northern Trust Focus Target Retirement Funds to its employee retirement savings plan in 2013. At the time, The Northern Trust Funds “already had a history of poor performance,” the lawsuit says, and thereafter performed worse than 70 to 90 percent of peer funds for “nearly a decade.” The Northern Trust Funds, according to the complaint, now comprise nearly half of the plan’s 24 investment options and collectively represent over 30 percent of its assets, and are the plan’s default investment option for those who do not select another vehicle.
The suit argues that Walgreens neglected its fiduciary duty to plan participants by choosing and then failing to replace the underperforming funds, which the plaintiffs estimate have cost plan members more than $300 million in retirement savings since 2014. In fact, according to a leading financial information and technology company, plan participants who invest in the Northern Trust Funds could earn $193,925 less in retirement savings than employees who participate in top-rated retirement plans of a similar size, the case says.
“The $193,925 disparity translates to an additional 10 years of work per participant,” the complaint reads.
The lawsuit alleges violations of the Employee Retirement Income Security Act (ERISA), and proposes to cover a class of:
“All participants and beneficiaries of the Plan who invested in any of Northern Trust Focus Target Retirement Trusts from January 1, 2014 through the date of judgment, excluding the Walgreen Defendants, any of their directors, and any officers or employees of the Walgreen Defendants with responsibility for the Plan’s investment or administrative function.”