Transamerica Agrees to Settle ERISA Suit

The settlement agreement includes both a $5.4 million payment and non-monetary relief.

Transamerica and the trustees of its 401(k) plan have agreed to pay $5.4 million to settle an Employee Retirement Income Security Act (ERISA) lawsuit.

In addition, for a period of three years from the effective date of the settlement agreement, Transamerica has agreed to continue offering fiduciary training to its trustees. According to the settlement agreement, “The training will be conducted on a yearly basis by outside legal counsel or by the plan’s unaffiliated investment consultant, at Transamerica’s election. If a new trustee joins the trustees between annual fiduciary training sessions during the [three-year period], he shall be provided with a copy of the most recent fiduciary training materials as part of his onboarding.”

Also, for that three-year period, the plan will continue to retain an unaffiliated investment consultant to provide independent investment consulting services to the trustees on approximately a quarterly basis. The defendants are not required to comply with these non-monetary provisions “should Congress, the Department of Labor [DOL] or any other applicable regulatory or self-regulatory body impose substantive requirements that render such compliance unduly burdensome, whether through statute, regulation, guidance or otherwise,” the settlement agreement states.

Participants in Transamerica’s retirement plan sued the company in late 2018, alleging that the plan has favored investment products managed by a Transamerica affiliate, to the detriment of participant performance.

The lawsuit also said, “Transamerica exacerbated plan participants’ losses by encouraging them to sign up for Transamerica’s Portfolio Xpress, a tool that automatically allocated participants’ money to Transamerica’s investment products.” Also named in the suit were trustees of the Aegon USA Inc. Profit Sharing Trust (which was renamed last year to be the Transamerica 401(k) Retirement Savings Trust), who were responsible for the selection and monitoring of the investments in the Transamerica plan. Aegon is the parent company of Transamerica.

In August 2019, a federal court judge refused to dismiss the case, finding that the new claims in the lawsuit were not claims that had been released in a previous lawsuit settlement and the plaintiffs had made sufficient pleadings.

According to the settlement agreement, the defendants deny any liability or wrongdoing, and Transamerica states that it is entering into the agreement solely to eliminate the burden and expense of protracted litigation.

A Transamerica spokesperson told PLANSPONSOR: “It is a matter of fact that this is not a self-dealing lawsuit. Plaintiffs made no claims in the lawsuit of a breach of the duty of loyalty or prohibited transactions. They made clear to the court that they were not pursuing self-dealing claims.”