The ability to sue a retirement or pension plan manager in Texas depends on the type of plan you have. If you work for a private company and have a plan like a 401(k), it is most likely protected by a powerful federal law called the Employee Retirement Income Security Act, or ERISA. ERISA sets the rules for most private company pension plans and retirement plans, like 401(k)s and 403(b)s. This law was created to make sure that the money in these plans is protected and managed responsibly for the employees and retirees who depend on it.
However, government plans, like those for teachers, police, or state employees, are not covered by ERISA. Instead, they are protected by Texas state laws and the Texas Constitution, and lawsuits against these plans are handled in Texas state courts.
The people who manage your retirement plan are called “fiduciaries.” They have a very serious responsibility to take care of your money. If they fail, you have the right to sue them to recover your losses, but the court you go to depends on the type of plan you have.
What Fiduciary Duties May Be Raised in a Lawsuit in Texas?
When you sue a plan manager, the case is usually about them breaking their “fiduciary duties.” Think of a fiduciary as a trusted guardian for your retirement money. Just like you would expect a guardian to be responsible and careful, ERISA expects fiduciaries to follow a strict set of rules. When they break these rules, it is called a breach of fiduciary duty.
Here are the most important duties that fiduciaries must follow:
Duty of Loyalty
This is one of the most important rules. The duty of loyalty means the fiduciary must act only for the benefit of the people in the plan (the employees and retirees). They cannot make decisions that help themselves or the company if it hurts the retirement plan. Their loyalty must be to you and your fellow employees, not to anyone else.
For example, a company’s management cannot choose an investment fund for the 401(k) plan just because it is managed by a friend of the CEO. They must choose funds based only on what is best for the employees’ retirement savings.
Duty of Prudence
This is also known as the “prudent person rule.” It means that the fiduciary must act with the same care, skill, and caution that a sensible and experienced person would use in a similar situation. They are expected to be careful and thoughtful when managing the plan’s money.
For example, a prudent fiduciary would not put all the retirement plan’s money into one single, high-risk investment. A sensible person would know that is too risky. Instead, they must make careful and informed decisions to protect the money from big losses.
Duty to Diversify
This duty is part of being prudent. “Diversify” is a fancy word for not putting all of your eggs in one basket. A fiduciary must spread the plan’s investments across different types of assets. This helps protect the plan from losing a lot of money if one particular investment does poorly. By diversifying, they lower the overall risk for everyone in the plan.
Duty to Follow the Plan Documents
Every retirement plan has official written documents that explain how the plan works. A fiduciary must follow the rules written in these documents. The only time they can ignore the documents is if a rule in them would violate the ERISA law itself. This duty makes sure that the plan is run consistently and fairly for everyone.
These important duties of loyalty, prudence, and diversification are not just for private plans. Texas law requires managers of governmental pension plans to follow very similar rules. They must also act solely in the best interest of the employees and retirees, manage the money carefully, and diversify the investments to keep them safe.”
What Claims May Apply to Retirement Plan Administrators?
When fiduciaries break one of their duties, it can lead to different kinds of legal claims in a lawsuit. These claims are the specific ways you say the plan manager did something wrong. Here are some of the most common claims in these lawsuits.
Charging Excessive Fees
Every retirement plan has fees. These fees pay for managing the plan and the investments. However, sometimes the fees are unreasonably high. A fiduciary has a duty to make sure the fees are fair. If they choose investment funds with very high fees when there were similar, cheaper options available, they can be sued. High fees can eat away at your savings over time and leave you with much less money for retirement.
Making Poor Investment Choices
Fiduciaries are responsible for choosing the investment options that are offered in your retirement plan. If they choose funds that are too risky or that consistently perform much worse than similar funds, they may have broken their duty of prudence. They are not expected to be perfect, but they are expected to monitor the investments and remove ones that are not good choices for a retirement plan.
Having a Conflict of Interest
This happens when a fiduciary makes a decision that benefits themselves or the company instead of the employees. This is a breach of the duty of loyalty. A common example is when a company fills its 401(k) plan with its own company stock, especially if the company is not doing well. They might do this to make the company look better, but it can be very risky for the employees if the company’s stock price falls.
Wrongfully Denying Your Benefits
If you are retired and the plan administrator refuses to pay you the benefits you are owed, you can sue to get your money. The plan must follow its own rules for paying out benefits. They cannot just make up a reason to deny your claim.
Claims Against Outside Service Providers
Sometimes, the person who made the mistake was not the main plan manager. It might have been an outside consultant, accountant, or other service provider who gave bad advice. Even for a private company plan, you may be able to file a separate lawsuit against these outside helpers under Texas law for their professional mistakes.
A Special Note on Suing Government Plans
It is important to know that suing a government retirement plan in Texas can sometimes be harder. Texas law gives some of these plans and their managers a form of legal protection called “immunity,” which can limit your ability to file a lawsuit against them. This is a very important reason to talk to a lawyer who understands the specific rules for government pensions.
Experienced Texas lawyers who handle these cases know how to look for these problems and gather the evidence needed to prove the claim. A good Texas employment lawyer can review your plan’s performance and fees to see if the fiduciaries acted improperly.
Can I Bring a Class Action Lawsuit Against a Retirement Plan Administrator in Texas?
Yes, in many cases you can. In fact, most retirement and pension plan lawsuits are filed as class action lawsuits.
A class action lawsuit is when a large group of people who have been harmed in the same way by the same company join together to file one big lawsuit. In Texas, for a judge to approve a case as a class action, it must meet certain rules. For example, there must be so many people affected that it would be impractical for them all to sue individually.
Also, everyone in the group must have been harmed by the same general problem, and the person leading the lawsuit must have a similar claim as everyone else and be able to fairly represent the whole group. Instead of hundreds or thousands of employees filing their own separate lawsuits, one or a few employees can represent the entire group, or “class.”
This approach works very well for these types of cases. That’s because a fiduciary’s bad decision, like choosing high-fee funds or a bad investment, usually harms everyone in the company’s retirement plan, not just one person. Since everyone was hurt in the same way, it makes sense for everyone to sue together.
There are several benefits to a class action lawsuit:
- It is more powerful: A lawsuit from thousands of employees gets a company’s attention more than a lawsuit from just one person.
- It is more efficient: The court can handle one large case instead of thousands of small ones.
- It makes it possible to sue: For any single employee, the amount of money they lost might not be enough to make a lawsuit worthwhile. But when all the losses are added together for the whole group, the amount can be very large.
If you think there is a problem with your retirement plan, a legal consultation in Texas with an attorney can help you figure out if your case could be a class action.
Do I Need To Hire a Lawyer for Help With a Retirement and Pension Plan Lawsuit in Texas?
Yes, it is very important to hire a lawyer if you believe there is a problem with your retirement or pension plan. The law that governs these plans, ERISA, is known for being very complicated. It has its own special rules, procedures, and deadlines that are different from other types of lawsuits.
Trying to file one of these lawsuits on your own would be extremely difficult. Think of it like trying to perform a delicate surgery after only reading a book about it. You need someone with training and experience to get it right.
A lawyer who has experience with these cases can help you by:
- Reviewing your plan’s documents and investment performance to see if you have a strong case.
- Knowing what evidence to look for and how to get it from the company.
- Handling all the complicated legal paperwork and court filings.
- Making sure you do not miss any of the strict deadlines.
Fighting for you and all the other employees against the large legal teams that companies and investment firms have.
Your retirement savings are too important to risk. An experienced attorney can stand up for your rights and work to recover the money you have lost, helping to secure your financial future.
If you are worried about your retirement savings and think your plan has been mismanaged, you should speak with a legal professional. LegalMatch can help you find a Texas employment lawyer who can listen to your story and explain your options.
