Parties in Anthem ERISA Fee Litigation Propose Settlement

Fiduciary defendants were accused of allowing unreasonable expenses to be charged to participants for administration of the plan and of retaining high-cost and poor-performing investments.

The parties in an excessive fee lawsuit filed against the committee that oversees the Anthem 401(k) plan have reached a settlement agreement.

A February 19 docket entry in the case of Bell v. Anthem says, “The parties have reached a resolution subject to class approval.” The judge ordered that on or before March 15, 2019, the parties are to file a motion for preliminary approval of class settlement. Details of the settlement will be available then.

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In the complaint, it is alleged that plan fiduciaries allowed unreasonable expenses to be charged to participants for administration of the plan, and that they selected and retained high-cost and poor-performing investments compared to available alternatives. The complaint suggests the Anthem plan, “as one of the country’s largest 401(k) plans … with over $5.1 billion in total assets and over 59,000 participants with account balances,” should have gotten as good or better a deal than anyone in the institutional investing markets, but it failed to do so in a variety of ways, leading to about $18 million in unnecessary fees/losses for participants.

Surprisingly, most of the “imprudent” funds cited by name are provided by Vanguard, widely known for transparency and affordability, and are actually quite cheap from an industry-wide perspective—below 25 bps in annual fees. One fund cited has just a 4 bps annual fee, but according to the compliant an otherwise identical 2 bps version could have been obtained by an investor with the size and sophistication of the Anthem plan. Therefore an alleged breach occurred when Anthem continued offering the 4 bps version.

A judge moved forward claims in the case last March and denied summary judgment for the 401(k) plan fiduciaries just weeks ago. A trial date had been set.

AXA Equitable Life Creates Asset Allocation Plan for 403(b) Participants

The program will contain both aggressive and conservative portfolios, both dependent on years before a participant plans to retire.  

AXA Equitable Life has announced the availability of Semester Strategies, a new asset-allocation investment program designed for K-12 403(b) retirement plan participants. Semester Strategies is said to combine an asset-allocation plan commonly found in target-date funds (TDFs), with some downside market protection and the financial guidance of a licensed professional.

When available under their employer’s 403(b) plan, individuals will have access to model portfolios that range from conservative to more aggressive based on their years remaining to retirement, risk tolerance and stated investment return objectives.

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SWBC Investment Advisory Services created the model portfolios exclusively for AXA Equitable Life. SWBC provides ongoing fiduciary oversight for the program.

“As the leading provider of 403(b) retirement plans for K-12 educators, we continue to look for ways to innovate and provide greater value for our clients,” says Steve Scanlon, managing director and head of group retirement at AXA Equitable Life. “Current pension benefits alone are often not enough to allow individuals to live comfortably in retirement. We built Semester Strategies with educators’ unique retirement planning needs in mind by designing it to complement existing pensions with additional fiduciary oversight.”

The program is offered through an investment option in an AXA Equitable Life variable annuity contract for 403(b) retirement plans.

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