Swiss Re 401(k) Participants Drop Allegations Against Empower
The former Swiss Re employees had accused Empower of charging excessive recordkeeping fees and using participant data to market its own Roth IRAs.
Former employees at Swiss Re American Holding Corp. have voluntarily dismissed, with prejudice, their lawsuit against their former 401(k) plan’s recordkeeper, Empower, after accusing the provider of charging excessive recordkeeping fees. With the dismissal of those charges approved by the court on May 9, the lawsuit will continue against Swiss Re.
Rusadill et al. v. Swiss Re American Holding Corp. et al. was filed in February in U.S. District Court for the Southern District of New York. In addition to alleging that excessive fees were charged, the former Swiss Re workers had claimed Empower made improper rollover recommendations and used participant data for cross-selling activities.
Specifically, the plaintiffs alleged that Empower improperly used participant data to market its own Roth individual retirement accounts and, as a result, generated profits for itself.
The former employees likely would have needed to prove that Empower functioned as a fiduciary to the plan in order for the case against the firm to move forward, which very few Employee Retirement Income Security Act plaintiffs have managed to do. In the original complaint, the plaintiffs alleged that as a “fiduciary of the plan,” Empower violated its duties by giving investment advice and recommendations to roll over assets into its Roth IRA, causing the plan to engage in “prohibited transactions.”
Plan fiduciaries were accused of breaching their duties under ERISA by allowing the plan to pay excessive recordkeeping fees, as well as by choosing an “underperforming” target-date series for the plan’s default investment option—the J.P. Morgan Smart Retirement TDFs in the R5 share class.
The complaint also accuses Swiss Re of consistently amassing funds in its forfeiture account and not putting them toward paying plan expenses, reducing its contributions or allocating the funds as additional employer contributions.
As of December 31, 2023, the Swiss Re Group U.S. Employees’ Savings Plan had more than 4,000 participants with account balances and had assets totaling approximately $1.45 billion, according to the plan’s most recent Form 5500 filing.
The plaintiffs are represented in the case by Sedhom Law Group PLLC. The law firm did not immediately respond to a request for comment.