PLANADVISER - May/June 2021 - 6

compliance news //
defense that cannot be resolved on a
motion to dismiss. "
CalSavers Suit Dismissed Again
The 9th U.S. Circuit Court of Appeals
has affirmed the District Court for
the Eastern District of California's
dismissal of claims made by a group
that sought to block California's staterun
automatic individual
retirement
account (IRA) program.
The lawsuit, filed by the Howard
Jarvis Taxpayers Association, sought
to block the CalSavers Retirement
Savings Program on the grounds that
the
Security
Employee
Act
Retirement
(ERISA)
Income
pre-empts
CalSavers, therefore invalidating the
program.
In its dismissal, the court found
that ERISA does not pre-empt
CalSavers. " We hold that the preemption
challenge fails, " it said in its
ruling. " CalSavers is not an ERISA plan,
because it is established and maintained
by the state, not employers; it
does not require employers to operate
their own ERISA plans; and it does not
have an impermissible reference to
or connection with ERISA. Nor does
CalSavers interfere with ERISA's core
purposes. Accordingly, ERISA does not
pre-empt the California law. "
The case was previously dismissed
last March, after a lower court found no
impermissible reference to or connection
with ERISA plans in the statute.
In his dismissal, U.S. District
Judge
Morrison C. England Jr. had noted that,
per ERISA, the legislation establishing
the CalSavers program would " supersede
any and all state laws insofar as
they may now or hereafter relate to
any employee benefit plan. " He stated
that an " employee pension plan " is
" any plan, fund or program ... established
or maintained by an employer "
that provides
employees.
retirement
income to
New York City Mayor Approves
Auto-Enroll IRA Program
New York City Mayor Bill de Blasio, on
May 12, signed a measure to create
a city-facilitated retirement
savings
program for private-sector employees.
The legislative action will create a
mandatory
automatic
enrollment
individual retirement account (IRA)
program for employers in New York
City that do not offer a retirement plan
and that employ at least five people.
According to a summary published
on the New York City Council website,
the default employee contribution rate
would be 5%, which employees could
adjust up or down, or opt out of at any
time, up to the annual IRA maximum
of $6,000-or $7,000 if age 50 or older.
The plan would be portable, so that
The case was
previously
dismissed ... after
a lower court
found no
impermissible
reference to
or connection
with ERISA plans
in the statute.
when employees switch jobs they can
continue to contribute or roll over their
accounts into other retirement savings
plans. Employers would not contribute
to the IRA on behalf of employees.
The council voted to establish a
retirement savings board to facilitate
the implementation of the retirement
security program. The board would
consist of three members, who would
be appointed by the New York City
mayor.
The council summary cites the fact
that, out of roughly 3.5 million privatesector
workers in the city, only about
41% have access to an employer-sponsored
retirement plan. This is lower
than the national average, which the
council estimates at 53%, and down
from 49% a decade ago. Even more
troubling, according to the council's
data, 40% of New Yorkers near retirement
age have less than $10,000 saved
for post-employment.
Columbia University Settles Fee Suit
Parties in a lawsuit alleging fiduciaries
of two Columbia University retirement
plans engaged in breaches of the
Employee Retirement Income Security
Act (ERISA) that caused participants to
pay excessive fees have agreed to settle.
The case is a consolidation of two
lawsuits filed within the same week
in 2016. In 2019, U.S. Magistrate Judge
Stewart D. Aaron of the U.S. District
Court
for
the Southern District of
New York recommended a district
court judge deny Columbia University's
motion to dismiss claims in the
combined lawsuit as well as its motion
to throw out some testimony by plaintiffs'
expert witnesses.
Allegations in the lawsuit
included that the university selected
and retained expensive and poorperforming
investment options
that consistently and historically
underperformed
their
benchmarks
and similar funds. In addition, the
complaint said the school loaded the
plans-the Retirement Plan for Officers
of Columbia University and the
Columbia University Voluntary Retirement
Savings Plan-with many retail
share class options that were more
expensive than the institutional share
class options in the same mutual
funds that were otherwise available
for it to include in the plans.
The complaint also called out
annuity products offered by the plans,
which have restrictions for when
participants may liquidate assets
in the products and will charge a
surrender fee if they liquidate assets
before the restriction period.
According to the complaint, the
university used two recordkeepers
for its plans, TIAA and The Vanguard
Group Inc., which caused participants
to pay duplicative, excessive and unreasonable
fees for plan recordkeeping and
administrative services.
The settlement agreement says
Columbia University " denies all
liability for the claims made in the
class action and maintains that it is
without any fault or liability. " -PA
6 | planadviser.com May-June 2021
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PLANADVISER - May/June 2021

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