The avalanche of law suits filed against ERISA plan fiduciaries over the last decade may finally be subsiding. The subject went all the way to the Supreme Court that left the matter unresolved.
The basis for most of these suits was that all plans of similar asset size should pay comparable fees. While this would seem to be ridiculous on its face to anyone involved in the retirement plan business, institutions have been paying millions of dollars in settlements and judgements.
The answer to these lawsuits has always been to illustrate the differences in plans and services that explain the different fees.
Differences in plans and services include:
- Average participant balance
- Proximity to retirement
- Nature and quality of services
- Volume of activity
Finally, in the case of Probst v. Eli Lilly, the courts are being asked to recognized the fallacy of the excessive fee assumption and to order the plaintiffs to reimburse the defendants for the cost of defense.
This should be the model for handling future excessive fee suits.