The University of Miami, Coral Gables, Fla., has agreed to pay $1.85 million to settle claims by participants in the university’s 403(b) plan and four other defined contribution plans that the fiduciaries violated ERISA because they paid allegedly excessive fees, failed to remove poor-performing investments and didn’t choose lower-cost share classes for the investment menu.
A preliminary settlement agreement, which must be approved by a federal court judge, was filed Nov. 23 in a U.S. District Court in Miami in the case of Santiago et al. vs. University of Miami. The class-action settlement covers current and former participants in the five plans, according to the settlement notice filed by the plaintiffs.
The original complaint filed in April 2020 focused on the University of Miami Retirement Savings Plan — the 403(b) plan.
“However, as result of further investigation and the settlement reached during the parties’ June 22, 2021 mediation, plaintiffs have filed contemporaneously with this motion an amended complaint which expands the asserted claims to include all University retirement plans who received record-keeping services pursuant to the same contracts with Fidelity and TIAA-CREF as the Retirement Savings Plan,” the settlement document said.
The record keepers, Fidelity Investments and TIAA-CREF, aren’t defendants.
The four other plans are the Defined Contribution Retirement Plan for Faculty of the University of Miami, the University of Miami Retirement Savings Plan II, the University of Miami Hospital Retirement Savings Plan III, and the University of Miami Supplemental Retirement Annuity Program. As of Dec. 31, 2020, the aggregate assets for the five plans was approximately $5.94 billion, according to the latest Form 5500 filings.
The university also agreed, within three years of a court-approved settlement, to issue an RFP for record keeping. “The University and the plans’ fiduciaries have agreed that they will not agree to any increase in the current contractual fees paid by the plans to Fidelity and TIAA-CREF for record-keeping services those entities provide to the plans during the three years following the settlement effective date,” the settlement document said.
“By entering into the settlement now, plaintiffs saved precious time and money, and avoided the risks associated with further litigation, trial, and appeals,” said the settlement document, which was unopposed by the university.