Washington University in St. Louis has agreed to pay $7.5 million to resolve claims that it mismanaged employee pension plans.
The settlement benefits individuals who were participants, beneficiaries or other beneficiaries of the Washington University Retirement Savings Plan in St. Louis between June 8, 2011 and March 31, 2022.
Washington University in St. Louis is a private university with over 14,500 full-time students enrolled in more than 300 programs taught by 3,645 faculty. Thousands of faculty and other staff can be enrolled in the university’s retirement savings plan.
However, according to a class action lawsuit, the University of Washington may have mismanaged those plans to the detriment of employee retirement funds.
Instead of managing the fund itself and fulfilling its fiduciary duties, the University of Washington would have entrusted the management of the fund to the Teachers Insurance and Annuity Association of America and the College Retirement Equities Fund (TIAA-CREF) and Vanguard .
According to the pension class action lawsuit, these companies funneled pension funds into proprietary products through TIAA, resulting in exorbitant fees for TIAA and Vanguard.
“The plan and its participants lost the potential growth their investments could have achieved had the defendants properly discharged their fiduciary duties,” the University of Washington class action claims.
Plaintiffs argue that this management of the retirement fund violated the federal Employees Retirement Income Security Act (ERISA). The class action claims that under ERISA, the University of Washington had specific fiduciary duties to ensure the fair and successful management of the fund. The university would have failed in these duties.
Washington University in St. Louis has not admitted any wrongdoing under ERISA or other laws, but has agreed to resolve those allegations with a $7.5 million class action settlement.
Under the terms of the settlement, class members may receive payment in cash. Payments are based on the size of each group member’s quarter-end account balances during the group period.
According to the settlement website, payouts will be at least $25 but will vary widely, with higher account balances resulting in higher shares of the Washington University in St. Louis settlement fund.
The University of Washington also agreed to provide non-monetary benefits as part of the settlement. The university will continue to provide annual fiduciary training, review plan policy statements at least annually, and make other changes to ensure fair administration of the pension fund.
Class members cannot opt out of the settlement. However, they can choose to object to the settlement by August 11, 2022.
The final approval hearing for the Washington University in St. Louis settlement is scheduled for August 31, 2022.
No claim form is required to benefit from the settlement. Payments will be automatically distributed to class members who do not opt out of the settlement.