Retirement and pension plan lawsuits may be possible to file in New York against retirement or pension plan managers in some situations. The general rule of law that applies to retirement plans and pension plans is the Employee Retirement Income Security Act (ERISA).
Under ERISA, an employee may have grounds to sue a manager who is responsible for maintaining their retirement plan or pension plan, called a fiduciary. A fiduciary is someone who plays an active role in managing or oversees an employee’s retirement investment and who has a legal obligation to conduct themselves ethically in relation to the employee’s financial interests.
Lawsuits based on ERISA typically involve claims that employers or third-party money managers violated the fiduciary duty they owed to the employee, called the plaintiff in the lawsuit. It is important to note that ERISA only applies to employers in the private sector.
ERISA does not apply to local, state, or federal governmental agencies or church-provided plans. This means an employee cannot use ERISA as a basis for a lawsuit against these entities.
To find out more about retirement and pension plan lawsuits in New York, it is important to schedule a legal consultation in New York.
What Fiduciary Duties May Be Raised in a Lawsuit in New York?
A private employer or a related third-party money manager, as a fiduciary, will be responsible for various duties, which are discussed below. The fiduciary will be personally liable if they violate any of the duties listed below.
Duty to Diversify
An employer or third-party money manager has to make sure that an employee’s retirement funds are not concentrated in one single investment or in a small number of investments. For example, when a fiduciary invests all of an employee’s retirement into one single stock, they are violating this duty.
Instead, these investments should be spread into various types of assets, including real estate, stocks, bonds, and various industries and sectors. This helps minimize potential losses for the employee.
Duty of Loyalty
The duty of loyalty provides that fiduciaries have to prioritize the best interests of the employee or prospective retiree over their own interests or the employer’s interests.
For instance, a fiduciary should not invest an employee’s retirement funds in a high-risk investment to earn higher fees for themselves or the company. Instead, they should choose investments that are appropriate for the employee’s risk tolerance, financial goals, and time horizon.
Duty of Obedience
A fiduciary has to follow the rules provided by ERISA as well as any applicable guidelines that are established by the type of retirement plan. For example, 401(k) plans have rules about contribution limits and investment options. If a fiduciary does not comply with these rules, they may face fines, penalties, or disqualification of the plan.
Duty of Care
A fiduciary has to exercise the same level of skill, care, diligence, and prudence that a similarly situated professional would when managing an employee’s invested contributions. For example, if they fail to monitor the employee’s investments and make any required adjustments, they may be violating this duty.
Exclusive Purpose Rule
A retirement plan has to serve the sole purpose of providing benefits to a participating employee and not to generate profit for an employer or the fiduciary themselves. For example, fiduciaries cannot use employees’ retirement funds to invest in something that would primarily benefit themselves or the employer.
New York lawyers can help both employees and fiduciaries ensure they are in compliance with their retirement plan requirements and all applicable laws.
What Claims May Apply to Retirement Plan Administrators?
An employee may be able to sue their employer or retirement plan administrator based on various legal claims, which are discussed in the following paragraphs.
Failure to Execute Employees’ Purchase and Sale Decisions in a Timely Manner
If an employee submits a request to sell an investment in their retirement plan but the administrator does not act promptly and the value of that investment falls significantly before it is sold, the employee may be able to sue for their financial losses.
Failure to Disclose Material Information About the Plans
If a plan administrator fails to inform an employee regarding the fees and expenses that are associated with specific investment options in their retirement plan, it may be considered failing to disclose material information. This may result in an employee making an uninformed decision that negatively impacts their retirement savings and that can serve as the basis for a legal claim.
Failure to Offer Proper Investment Strategies
If a plan administrator only provides high-risk investment options in an employee’s retirement plan without also sharing more conservative options, it may be considered failing to offer proper investment strategies. This failure to offer appropriate options may put the employee’s retirement savings at risk, which can result in a legal claim for losses.
Failure to Distribute Benefits Associated with the Plan for Unjust Reasons
If a plan administrator denies an employee’s valid request for a hardship withdrawal or retirement loan without a legitimate reason, it can result in a claim of failure to distribute benefits associated with the retirement plan for unjust reasons. If the unjust refusal results in financial hardship for the employee, it may result in a legal claim against the plan’s administrator.
Other Scenarios Leading to ERISA Violations
There may also be other scenarios that lead to ERISA violations. One example is the improper allocation of plan assets.
Improper allocation of plan assets can occur when a plan administrator uses assets in the plan to pay for expenses that are not related to administration of the retirement plan, for example, personal expenses. These types of misappropriations of plan assets can result in legal claims against a plan administrator.
Because any individual who manages an employee’s retirement plan is considered to be a fiduciary, this liability can also apply to plan managers, employers, and other professionals who are responsible for maintaining the employee’s retirement assets.
Can I Bring a Class Action Lawsuit Against a Retirement Plan Administrator in New York?
Lawsuits that involve retirement plan mismanagement in New York can face challenges when a manager or employer raises certain defenses. Filing a class action lawsuit can be an effective legal strategy.
Some examples of claims that can be filed as class actions based on violations of fiduciary duty include:
- Dropping Stock Claims: This claim involves mismanaged investments related to the retirement plan
- Anti-cut Back Claims: If managers or employers retract promised or vested benefits from plans, an anti-cut back claim may be filed
- Fees Claims: This arises when excessive fees were paid to retirement plan fiduciaries for overseeing plan assets
- Improper Transactions: Improper usage of investments related to retirement plans, such as using investment money for personal purchases, can result in a legal claim
Do I Need To Hire a Lawyer for Help With a Retirement and Pension Plan Lawsuit in New York?
If you have any type of retirement plan or pension plan issue, question, or concern in New York, it is essential to consult with a New York employment lawyer for more information. An ERISA claim can be extremely complicated, whether you are an employee or an employer.
As an employee, your attorney can evaluate what claims you may be able to make related to your retirement plan management, ensure your rights are protected, and recover your losses. As an employer, your lawyer can help with dispute resolution and create a plan that protects both you and your employees.
You can use LegalMatch’s free online lawyer matching services to find a qualified New York employment lawyer near you who handles retirement plan cases. When you use LegalMatch, you simply complete a short submission about your issue and select your location and lawyer preferences to be matched to licensed and pre-screened member attorneys near you.
