Compliance November 16, 2022

Proposed Settlement Would Cost Juniper Networks $3 million

 Juniper agreed to a proposed settlement dismissing allegations they mismanaged their sponsored retirement plan; judicial approval still required.

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Juniper Networks, Inc. has agreed with plaintiffs to settle for $3 million a lawsuit brought in August 2021 under the Employee Retirement Income Security Act. The settlement was submitted in September and motioned for preliminary approval last week, although it is still subject to U.S. District Court approval. Juniper, a networking hardware company based in California, admitted no fault or wrongdoing as part of the settlement.

The case, Reichert et al vs. Juniper Networks Inc. et al., was initially brought by two participants in Juniper’s sponsored 401(k) plan. They alleged Juniper did not adequately monitor the investment options in the plan and that options provided to participants had unreasonably high fees compared to reasonable alternatives. They also alleged that Juniper did not disclose enough information to allow participants to make informed investment choices.

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In November 2021, Juniper filed a motion to dismiss. The motion alleged that the plaintiffs lacked standing to sue, since the funds with the higher fees were optional and the plaintiffs did not elect those funds. In order to sue in federal court, the plaintiff must have been injured in some way, and you cannot be injured by an investment you did not make, argued the motion. Additionally, Juniper argued that the mere existence of lower cost funds does not prove imprudence and that the plaintiffs did not provide meaningful benchmarks to which the funds in question could be justly compared.

The plaintiffs responded in February 2022, arguing they can sue under ERISA on behalf of all plan participants, and the fact they did not suffer personally from the higher fees is legally immaterial. They also asserted that the plaintiffs were harmed by plan-wide decision making.

Judge James Donato, of the U.S. District Court for the Northern District of California, sided with the plaintiffs in April 2022 and denied the motion to dismiss. Donato wrote that the plaintiffs made adequate factual claims that should be adjudicated at trial, and they were correct in arguing they have standing to sue on behalf of the entire plan as a class under ERISA.

The parties submitted settlement paperwork on September 15, with the official motion for preliminary approval made public on November 11. Juniper will pay $3 million to cover all claims made by the plaintiffs. This amount covers legal fees and expenses, which could be as high as $1 million, at the discretion of the judge. It also includes a $15,000 award to the two plaintiffs that brought the suit and up to $100,000 for administrative costs and the cost of notifying class members. The remaining funds will be awarded to the affected plan participants.

The parties requested approval from the judge, which has not yet been given. They also requested a fairness hearing in the future to receive final approval for the settlement.

If the settlement is approved, the claims will be dismissed with prejudice and the participants will be barred from taking further legal action related to the plan. The proposed settlement also states that if the Department of Labor objects to the settlement, the defendants have a right to withdraw from it.

Data & Research November 16, 2022

Retirement Plans Still Vital in Talent War to Retain Employees

Research from Voya finds U.S. workers still value a retirement plan about as much as a flexible work arrangement. Ubiquity Retirement + Savings backed up the findings, saying it will double sales of 401(k)s in part due to the war for talent.

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Research from retirement plan provider Voya Financial released Tuesday found that 60% of American workers are more likely to stay with their employer if the job includes an employer-sponsored retirement plan.

Retirement benefits were a top three draw for employees, ranking just below a competitive salary (64%) and flexible work hours (63%), according to the October survey of about 1,000 U.S. workers aged 18 or above. While shifts in the workplace stemming from the pandemic have popularized flexible and hybrid schedules, a strong retirement savings plan plays as important a role as ever, Heather Lavallee, CEO of wealth solutions and president CEO-elect of Voya Financial, said in a press release.

“Employers need to remember the employer-sponsored retirement plan is a critical component to helping individuals prepare for a more secure financial future,” Lavallee said.  

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U.S. job openings rose in September from the prior month despite volatile markets and rising inflation, with demand outpacing the number of unemployed people looking for work, according to the latest data from the U.S. Bureau of Labor Statistics. Meanwhile, the employment cost index, a measure of worker wages and benefits, showed that benefits increased 5% for the 12-month period ending in September 2022.

Ubiquity Retirement + Savings, a plan provider for small businesses, reinforced the message that companies are looking to retirement benefits as a talent draw. The San Francisco-based firm said Tuesday that sales of its flat-fee 401(k) offering outpaced the company’s “most aggressive” projections due in part to the demand from small businesses to add plans in order to support and retain talent.

“We anticipate by the end of the year we will have grown twofold based on how we ended 2021,” Michael Bissett, vice president of business growth for Ubiquity, said in an emailed response.

Ubiquity noted in a press release job turnover and the Great Resignation as a driver for businesses to buy its customizable, flat-fee retirement plans. Employers are emphasizing benefits packages to both keep employees and outduel competitors, the company said.

“We had a banner year as small business owners across industries such as professional services, benefit and insurance agents, retirement and wealth management advisors, payroll firms, credit unions, law firms, healthcare doctors, dentists and other gig workers increasingly responded to the need for competitive retirement plan offerings that differentiate them amid the great talent war,” Ubiquity Founder and CEO Chad Parks said in the release.

Ubiquity’s record growth so far in 2022 in both revenue and 401(k) plan count was also driven by partnerships and state mandates for workplaces to offer retirement plans, Bissett said. The privately-held firm declined to give specific figures, but touts more than 100,000 participants and $3 billion in retirement assets under administration through its automated recordkeeping and plan management offerings.

“This is a testament to how well our marketing team has gotten the message out about our mission as well as the strength of our partnerships with institutional and individual advisers,” Bissett said.

At a T. Rowe Price retirement industry media briefing on Tuesday, experts at the Baltimore-based investment manager also cited the continued talent squeeze as driving retirement plan benefit pitches and sales.

“The talent gap is a major driver for offering retirement plans,” Michael Doshier, a Senior Retirement Strategist for T. Rowe Price, said in a webcast of the briefing. “Turnover has been huge for the firms advising retirement plans.”

Doshier said that about two-thirds of the firms they survey cited talent retention and acquisition as a top concern they want to address.

About 68% of workers surveyed by Voya say they have plans to save for retirement next year, with 79% agreeing that sticking to long-term investment during a volatile market is important.

“It’s extremely encouraging to see individuals keeping a focus on their long-term goals, despite the rollercoaster of financial extremes many have experienced over the past several years,” Lavallee said.

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