The workers’ suit alleged the company imprudently allowed its pension plans to invest in Rite Aid common stock when it was not a suitable investment. The workers said t his action constituted a breach in Rite Aid’s fiduciary duty under ERISA, according to a repot by The Legal Intelligencer.
Under the terms of the settlement, Rite Aid will
pay about $10.7 million in cash and promised to
maintain its current formula for matching employee
contributions through 2006. Lawyers estimated that
matching contributions to the 401(k) plan will exceed
$25 million per year, for a total in excess of $125
million from 2002 through 2006. For class members who
remain participants in the 401(k) plan and continue to
contribute a portion of their pay to that plan, it is
estimated that more than $30 million will flow to their
Rite Aid also agreed in the settlement that if its matching contributions for any calendar year from 2003 through 2006 are less than the matching contributions paid in 2002, the company will contribute up to $1.75 million more to the 401(k) plan.
Additionally, t he settlement calls for “structural changes” in the administration of Rite Aid’s employee benefit programs, including the appointment of an institutional trustee and an administrative committee for the plans.
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