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Excessive Retirement Fees Suits Jump-Start Pooled-Plan Activity

May 24, 2022, 5:39 PM

US employers increasingly are turning to pooled retirement plan designs to avoid the risks and costs associated with a rising tide of class actions over fees for workplace 401(k) investments.

Plaintiffs have filed more than 180 lawsuits challenging retirement plan fees since 2020, an increase partly fueled by pandemic-related participant scrutiny and partly by the success in strategy these kinds of lawsuits have shown. Meanwhile, the fiduciary insurance market is responding, slapping seven-figure out-of-pocket deductibles on even the most standard policies.

Pooled-employer plans were intended by Congress to be a method for encouraging smaller employers to set up new ...