University of Pennsylvania 403(b) Plan Lawsuit Dismissed

September 25, 2017

On September 21, the United States District Court for the Eastern District of Pennsylvania dismissed a participant lawsuit against the University of Pennsylvania alleging various fiduciary breaches. The complaint was one in a wave of lawsuits filed against university retirement plans last year. This decision again affirms that courts determine whether a fiduciary is prudent by evaluating the documented process, not results. In its decision, the court concluded:

  • “Locking in” certain investments (i.e. the CREF Stock Account and Money Market Account) is not, by itself, imprudent;
  • The plaintiffs’ excessive recordkeeping fee claims failed because there were rational reasons to have multiple recordkeepers and charge asset-based fees;
  • The plaintiffs’ claims that the plan offered confusing, duplicative, and expensive investments failed because the plan offered a reasonable range of investment options with different risk and expense characteristics; and
  • The plaintiffs did not adequately demonstrate that the plan fiduciaries had an imprudent process for selecting investments.

Additional Information

If you would like assistance forming a retirement plan committee or reviewing and documenting your committee’s processes, please contact a member of our Employee Benefits Practice Group listed in the right-hand column of this page.