A lawsuit has been filed on behalf of retirement plan participants who have invested in guaranteed investment contract (GIC) accounts provided by United of Omaha Life Insurance Company.
The allegations in the lawsuit are similar to those in a lawsuit recently filed against Principal Life Insurance Company.
According to the complaint, United of Omaha operates the United of Omaha Guaranteed Account to the retirement plans in which the plaintiff and the proposed class members are participants and beneficiaries. These participants and beneficiaries have invested in the Guaranteed Account pursuant to a GIC that governs the relationship between the plans and United of Omaha.
The lawsuit says the contract grants United of Omaha discretionary authority to set its own compensation as a service provider to the plans. In addition, the contract grants United of Omaha discretionary authority to determine the rate of return that will be credited to participants in plans that invest in the Guaranteed Account. The contract does not disclose how the credited rate is determined, does not specify the credited rate, and does not specify a minimum rate of return.
The lawsuit alleges that United of Omaha breached these fiduciary duties and engaged in transactions prohibited under the Employee Retirement Income Security Act (ERISA) by, among other things, improperly exercising its discretionary authority “to maximize its own compensation and retain large profits rather than crediting the participants and beneficiaries of the plans with appropriate returns.”
The complaint says United of Omaha invested the retirement assets it received pursuant to the contract, and retained for itself the difference between the investment earnings on those assets and the interest it chose to credit to the plans. “United of Omaha retained the margin in addition to service fees it charged the plans, which caused United of Omaha to receive excessive fees incident to its administration of the Contract,” the complaint alleges. “As a result of United of Omaha’s actions, the plans’ assets were diminished.”
The lawsuit seeks monetary and equitable relief on behalf of the class.