Citigroup, 401(k) Participants Agree to Settle ERISA Lawsuit

The lawsuit alleged that Citigroup violated its fiduciary duties under the Employee Retirement Income Security Act (ERISA) by offering and keeping affiliated funds in its 401(k) plans when better-performing, lower-cost funds were available.

Without any admissions of liability as to any claims, or as to the weakness or strength of either party’s respective claims or defenses, the parties in a lawsuit alleging Citigroup violated its fiduciary duties under the Employee Retirement Income Security Act (ERISA) by offering and keeping affiliated funds in its 401(k) plans when better-performing, lower-cost funds were available have reached a settlement agreement.

According to the document submitted to U.S. District Judge Sidney H. Stein of the U.S. District Court for the Southern District of New York, Citigroup will pay $6,900,000 to settle the lawsuit. The settlement amount includes all attorneys’ fees, incentive awards, litigation expenses, administration costs, taxes and costs of any kind associated with the resolution of the suit.

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Specifically, no later than the fifth business day after Stein enters an order approving the motion for preliminary approval of the settlement, Citigroup will be responsible to pay $350,000 to an escrow account whose terms and agent the parties will jointly select. This first settlement payment will be used by class counsel to cover settlement administration and notice costs. No later than the fifth business day after Stein gives final approval of the settlement agreement, Citigroup will wire a $6,550,000 payment to the escrow account.

The original lawsuit, filed in 2007, said fiduciaries to Citigroup’s 401(k) plan failed to act prudently and solely in the interest of the plan and its participants and beneficiaries when selecting investment products and services, but instead “put Citigroup’s interests ahead of the 401(k) Plan’s interests by choosing investment products and pension plan services offered and managed by Citigroup subsidiaries and affiliates, which generated substantial revenues for Citigroup at great cost to the 401(k) plan.”

LendEDU Says Millennial Spending Habits Won’t Impede Retirement Savings

The average Millennial spends over $30 on coffee per month, but will also, on average, save $480 for retirement in the same time frame. 

In the 1980s and ‘90s, young Gen Xers allocated their money towards mortgages for white-picket fence houses, first cars, and impending retirement savings. In 2018, Millennials prefer to spend their hard-worked cash on $5 oat-milk lattes, clothes and Netflix. So, while this youthful workforce defines themselves as savers, are these expenditures harming their future years?

A recent LendEDU study, conducted with over 1,000 Millennial Americans ages 22 to 37, revealed the correlation between day-to-day spending habits and assigned retirement savings for one month. In it, the survey found, the average Millennial spends $38 on coffee per month, but will also, on average, save $480 for retirement. However, 27% of respondents expend more on coffee than on retirement savings.  

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Additionally, the survey reported 49% of Millennials will spend more on restaurants rather than allocating finances towards their 401(k). The average amount spent per month on dining out? One-hundred and sixty-three dollars, the survey says. And, similar to coffee and dining expenses, Millennials are spending their money on online streaming services and events, such as Netflix, Spotify and concerts.

The study points out the importance of enjoying these social events and small pleasures. Because even though Millennials will spend more on avocado toasts and exercise, past studies report they are prepping for retirement better than previous age groups and are highly-informed health care consumers. And, they continue to manage that average $480 per month on retirement savings.

More information about the study can be found here.

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