PLANADVISER - January/February 2018 - 7

first examples of the now common self-dealing fiduciary
breach claims.
Under the terms of the proposed settlement, for the
benefit of class members, Allianz will pay $12 million into
a common fund, which will be allocated pro rata among the
members in proportion to their account balances in the plan
during the relevant period. This sum will be distributed to
participants " after deduction of any attorneys' fees, expenses
and class representative awards approved by the court. "
Among the nonmonetary relief agreed upon, for a period
of no less than three years from the settlement agreement's
effective date, Allianz must retain an " unaffiliated investment
consultant " to provide an annual evaluation of the
plan's investment lineup and review the plan's investment
policy statement (IPS), among other prospective relief.
Great-West Prevails in Stable Value Suit
A federal district court judge has granted summary judgment
to Great-West Life & Annuity Insurance Co. in a lawsuit
that alleges it breached its fiduciary duty of loyalty under
Employee Retirement Income Security Act (ERISA) Sections
502(a)(2) and (3)-namely by setting predetermined interest
rates artificially low and charging excessive fees in order to
increase its own profits from the sale and servicing of the
Great-West Key Guaranteed Portfolio Fund.
U.S. District Judge William J. Martinez of the U.S. District
Court for the District of Colorado noted in his opinion that
at the center of plaintiff's first and second claims was the
allegation that Great-West failed to comply with ERISA's
requirements for fiduciaries of plan assets, so it first needed
to be determined whether Great-West was a fiduciary.
Great-West's primary summary judgment argument was
that it was not a fiduciary with respect to the fund because
ERISA contains an exemption for a guaranteed benefit
policy (GBP), meaning " an insurance policy or contract to
the extent that such policy or contract provides for benefits
the amount of which is guaranteed by the insurer. "
DOL Sues Retirement Plan Fiduciaries
Following a U.S. Department of Labor (DOL) investigation,
the U.S. District Court for the Northern District of Illinois
entered a judgment requiring Michael Lewis, former president
of Acme Orthotics and Prosthetic Laboratories Inc.,
to restore $128,536 in losses owed to the company's Profit
Sharing 401(k) Plan and Trust.
As fiduciaries, Lewis and co-defendant Monica Fox failed
to remit $58,532 in employee salary deferral contributions
and loan repayment contributions, including lost opportunity
costs, to the plan from July 2010 through April 2012. In
addition, Lewis liquidated $70,004 in plan assets, including
lost opportunity costs, from April 2012 to March 2015, and
used the funds for non-plan purposes.
Headquartered in Chicago, Acme Orthotic and Prosthetic
Laboratories sponsored the plan and closed it in
February 2015. Lewis was Acme's president and sole owner;
Fox was the firm's executive director responsible for the
company's payroll.
The judgment permanently enjoins Lewis and Fox from
acting as fiduciaries or service providers to employee benefit
plans subject to the Employment Retirement Income Security
Act (ERISA).
Delta Lawsuit Dismissed
Nearly a year to the day after participants in Delta Air
Lines' Delta Family Care Savings Plan filed a proposed class
action lawsuit against the company, the plan's administrative
committee and other fiduciaries, a federal district
court judge has dismissed the amended complaint.
The complaint alleged that, given its size and prominent
place in the marketplace, the plan had, and has, the ability
to demand and obtain lower-cost investment options from
providers.
The judge ruled in favor of dismissal due to a lack of
standing on the part of the proposed class of plaintiffs.
The decision states that, for a complaint to qualify as a
" case or controversy " that can be tried, the plaintiff must
have " suffered an injury in fact that is fairly traceable to
the challenged conduct of the defendant and is likely to be
redressed by a favorable judicial decision. "
Legislation Would Increase Plan Access
Late last year, U.S. Representatives Ron Kind, D-Wisconsin,
and Dave Reichert, R-Washington, introduced the Small
Businesses Add Value for Employees (SAVE) Act of 2017,
H.R. 4637.
According to a statement from Kind, the bill would
encourage more small businesses to offer retirement
savings plans to their employees. It also removes the
" common bond " requirement for multiple employer plans
(MEPs), enabling small businesses to pool together, regardless
of industry, to offer retirement plans to their employees.
The bill would also facilitate lifetime income disclosure
by showing participants how their balance would translate
into monthly income.
PBGC Increases Penalties
The Pension Benefit Guaranty Corporation (PBGC) is
required to amend its regulations annually to adjust, for
inflation, the maximum civil penalty for failure to provide
certain notices or other material information and certain
multiemployer plan notices.
The agency has therefore issued a final rule adjusting
the maximum civil penalties that PBGC may assess under
Sections 4071 and 4302 of the Employee Retirement Income
Security Act (ERISA). Section 4302, added to ERISA by the
Multiemployer Pension Plan Amendments Act of 1980,
authorizes the agency to assess a civil penalty of up to $100
a day for failure to provide a notice under Subtitle E of Title
IV of ERISA, which deals with multiemployer plans. Section
4071, added to ERISA by the Omnibus Budget Reconciliation
Act of 1987, authorizes PBGC to assess a civil penalty
of up to $1,000 a day for failure to provide a notice or other
material information under Subtitles A, B and C of Title IV
and Sections 303(k)(4) and 306(g)(4) of Title I of ERISA. -PA
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PLANADVISER - January/February 2018

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