Compliance May 21, 2025

Lawsuit Filed Against TIAA Alleging Mismanagement of Employee Retirement Funds

The complaint alleges TIAA breached its fiduciary duties and mismanaged billions of dollars in employee retirement savings by opting for high-cost investment options despite better alternatives.

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A complaint was filed Tuesday against TIAA by a former employee in U.S. District Court for the Southern District of New York, accusing the company of breaching its fiduciary duties under the Employee Retirement Income Security Act. The complaint, brought by former employee Brian Byrne on behalf of himself and other participants in TIAA’s retirement plans, claims the company mismanaged billions of dollars in employee retirement savings.

The plaintiffs allege that TIAA and other fiduciaries breached their fiduciary duties under ERISA by opting for high-cost investment options in the plan’s investment menu, despite cheaper alternatives, and for not removing an underperforming fund from the plan.

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According to the complaint, TIAA offers an in-house investment option called the College Retirement Equities Fund, which held more than $2 billion in assets as of December 2023, across eight different investment accounts with different fees. The plaintiffs allege that TIAA offered employees the class of the fund carrying higher fees, despite the availability of virtually identical funds with significantly lower costs.

For example, the complaint states that a $100,000 investment in the lower-cost class would incur fees of just $170 over a five-year period, compared with $1,043 in fees from the costlier class, assuming 5% investment returns each year.

Furthermore, the complaint alleges that TIAA did not remove its CREF Growth Fund from the plan, despite its underperformance of its market benchmark, the Russell 1000 Growth Index. Participants had about $480 million invested in the underperforming fund as of December 2023, according to the complaint.

“Acting in their self-interest, rather than the best interests of the plans and their participants and beneficiaries, the TIAA Defendants retained a poorly performing investment option that benefited TIAA, rather than the plans, despite the availability of superior—and readily available—investment alternatives,” the complaint states. “A loyal fiduciary, in possession of the same investment performance information, would have removed [the fund] as an investment option in the Plans and replaced them with a more prudent alternative.”

The complaint states that since 2009, the Growth Fund has underperformed its stated benchmark by more than186%.

The complaint alleges that the actions by TIAA violate its fiduciary duties of prudence and loyalty under ERISA, while also alleging that the company engaged in prohibited transactions under ERISA.

In December 2024, UnitedHealth Group settled for $69 million in a similar case.

The TIAA plans have approximately 28,000 participants with more than $9 billion in assets, according to the complaint.

Data & Research May 20, 2025

Survey Finds Participants Want Retirement Plans to Support Guaranteed Income

Almost nine in ten 401(k) plan participants believe employers have a responsibility to help ensure retirement income security, according to a survey by Nuveen and the TIAA Institute..

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An overwhelming majority (93%) of American 401(k) plan participants said it is important that they have the option to convert their savings into guaranteed monthly payouts, according to a Nuveen and TIAA Institute study released Monday.

The survey of 2,153 401(k) participants also found that 87% of respondents believe employers have a responsibility to help ensure retirement income security. Participants from younger generations are more apt to strongly agree: 57% of Gen Z and 54% of Millennials, compared with approximately 30% each of Gen X and Baby Boomers.

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In comparison, fewer than 60% of respondents expressed this view in a similar 2021 TIAA survey. 

“Today’s workers see guaranteed retirement income not just as a personal goal—but as a shared mission with their employer,” said Brendan McCarthy, head of retirement investing at Nuveen, which was acquired by TIAA in 2014, in a statement.

The 2025 survey highlighted a growing awareness among workers of a need for income options within current 401(k) offerings. While these plans are the main savings initiative for 79 million Americans, with assets totaling $6.8 trillion, they typically lack built-in options to convert assets accumulated in a plan into dependable retirement payouts, often referred to as “retirement income.” 

About 90% of participants surveyed said they would enjoy the inclusion of a fixed annuity in their 401(k) plan, showing interest in using such tools to secure monthly payments throughout retirement. A similar majority also favored integrating fixed annuities into target-date investments.

Still, many retirees struggle to establish plans to effectively withdraw money for retirement after spending a lifetime building the savings. In the survey, 21% of respondents said they had thought “a lot” about how to withdraw money from their 401(k) plan to provide retirement income. 

“While retirees are increasingly interested in lifetime income solutions, many struggle to develop effective withdrawal strategies,” said Surya Kolluri, head of the TIAA Institute, in a statement. “The challenge lies in converting retirement savings into sustainable monthly income—a process that remains unclear to most participants.”

Retirement Planning and Distribution Guidance

Four in 10 (42%) 401(k) participants have received retirement planning advice from a professional adviser or advisory service within the past two years, the survey found. This was more common among men (46%) than women (35%), and Baby Boomers (46%) compared with Gen Z (36%).

The vast majority (about 90%) received advice about how much to save (86%) and how to invest their savings (91%), while about four in five were advised about when they can afford to retire (79%) and how to withdraw money from their retirement savings to provide income in retirement (79%).

Of those who received withdrawal advice, 58% were advised to use an annuity and 15% were advised to not, while the possibility of annuitization wasn’t discussed with the remaining 27%. More than two-thirds (78%) of Baby Boomers received advice on how to withdraw money from their retirement savings, but less than half (46%) of Baby Boomers receiving withdrawal advice were advised to use an annuity.

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