Boeing has agreed to a $57 million settlement with employees, who claimed in a 9-year-old class-action lawsuit that the company’s 401(k) plan was charging workers excessive fees to save for retirement.
The settlement is the second-largest of its kind among high-profile suits involving employees upset about high fees in company 401(k) plans. Fees vary between different 401(k) plans and detract from the money people can accumulate for their retirement.
The cases are being closely watched by companies throughout the nation that offer 401(k) plans and worry about being held liable for the quality of funds and the fees they charge.
The cases have had a “humongous” impact on reducing 401(k) fees throughout the nation,” said Mike Alfred, chief executive of BrightScope, a firm that provides services for retirement savings.
In the Boeing case and others, employees have claimed that companies have a fiduciary duty to make sure fees in 401(k) plans are not excessive.
“This settlement is a reasonable approach to avoid the additional expense of continued litigation,” said Tony Parasida, senior vice president of Human Resources and Administration in a prepared statement. “It’s not an admission of wrongdoing, and Boeing maintains that it has prudently managed and overseen the (plan) at all times.”
In August, the class action reached a provisional agreement with the company. The settlement applies to people who were in Boeing’s Voluntary Investment Plan between 2000 and 2006.
Since the suit was filed nine years ago, the Chicago-based company has made changes in its 401(k) plan, including lowering the fees charged to employees, said spokesman Chaz Bickers. The company said that the settlement does not change the 401(k)’s current structure and noted a high ranking in a recent Bloomberg 401(k) comparison.