Supreme Court Delivers Win for Retirement-Plan Participants
Recently in Hughes v. Northwestern University, the Supreme Court issued a favorable decision for participants in employer-sponsored retirement plans, which are governed by the Employee Retirement Income Security Act of 1974 (ERISA).
In Hughes, current and former employees who were participants in Northwestern’s defined-contribution retirement plan filed a class-action alleging that Northwestern violated its fiduciary duty to the plan participants (a requirement that the people running the retirement plan act in the best interests of the plan participants). Specifically, they alleged that the people running the plan did not negotiate low enough fees for record-keeping services and included to many high-cost investment options.
The lower courts rejected the plan participants’ claims because at least some of the options Northwestern offered were sufficiently well-designed to satisfy the university’s duties to the plan participants.
The Supreme Court reversed the lower courts’ decisions because, even if some of the investment options were satisfactory, the plan fiduciaries also had a duty to weed out bad choices that were not good options for the plan participants. Thus, it was not enough for the plan to offer some good choices; it also had to continually monitor the plan and remove the bad choices. The Supreme Court said, “If the fiduciaries fail to remove an imprudent investment from the plan within a reasonable time, they breach their duty.”
This decision will likely be a very important one for employees and retirees who participate in defined contribution 401(k) and 403(b) plans because it will potentially require the plans to be more diligent about what investment opportunities the plans offer.
If you think your retirement plan is being mismanaged, the attorneys at Lebau & Neuworth may be able to help. Contact us at 1.888.456.2529 or lebauneuworth.com/contact-us.
Don’t Give Up – Fight For Your Full Retirement Benefits
If you work for a private sector employer and have a retirement pension plan, your rights to those benefits are governed by the federal Employee Retirement Income Security Act, or “ERISA.”
ERISA requires pension plans to provide participants with important plan information including features and funding; sets minimum standards for participation, vesting, benefit accrual and funding; provides fiduciary responsibilities for those who manage and control plan assets; requires plans to establish a grievance and appeals process for participants to get benefits from their plans; and gives participants the right to sue for benefits and breaches of fiduciary duty.
It is very important that you obtain legal advice and counsel promptly if you think your pension benefits are not being calculated correctly or if you have been denied benefits. Further, you must comply with the internal claims process for challenging any miscalculation or denial of your plan benefits. There are strict time periods for doing so.
Recently, Lebau & Neuworth attorneys assisted a nurse at Johns Hopkins University (JHU) Hospital who had worked for there for 38 years and before that worked for more than two years at Baltimore City Hospital, which JHU acquired decades ago. When she retired, JHU credited her with only 38 years of service. She filed an internal claim for benefits, seeking a full 40-year retirement benefit, claiming that JHU had assumed, in writing, the obligations under the Baltimore City Hospital retirement plan.
The initial claim was denied, but Lebau & Neuworth filed an internal appeal for our client and won and she was awarded full retirement benefits. She would have received about $500 less a month if she were only credited with 38 years of service.
We prevailed on the appeal by obtaining the Baltimore City Hospital plan documents and all the JHU plan benefits. We were able to find the language showing that JHU had assumed pension obligations of the City Hospital Plan. We also had to obtain documents proving that our client had worked for City Hospital for more than two years.
Our client is glad she did not give up. She fought for what was owed to her.
If you or someone you know is being denied employee benefits, please do not hesitate to call Lebau & Neuworth at (410) 296-3030 or email us at lebauneuworth.com/contact-us.