Walgreens Charged With A Class Action Lawsuit For Underperforming 401K Funds
Walgreens, the second-largest pharmacy store chain in the United States, faces a class action lawsuit filed by its employees for allegedly driving their retirement savings into underperforming funds.
Class Action Lawsuit
According to plaintiffs, the 401K funds where their retirement savings were redirected to performed to about 70 to 90 percent worse than related funds. This poor performance has been observed for almost a decade.
In February 2021, U.S. District Judge Charles R. Norgle Sr. approved the class action lawsuit filed by 15 individuals who took part in Walgreens’ 401K plan.
According to Judge Norgle Sr., all requirements for Class certification have been completed.
The complainants allege that the company’s failure to manage the funds cost its employees about $300 million lost in their retirement savings.
The class action lawsuit seeks to represent affected former and current employees of Walgreen. It is estimated that the class members will reach about 240,000 people.
The issue regarding the underperforming 401K fund was first brought to light in August 2019.
The affected employees were those who participated in the Walgreens Profit-Sharing Retirement Plan.
The plan’s funds were invested into the “Northern Trust Focus Target Retirement Trusts” included in the plan since January 1, 2014.
Plaintiffs assert that the funds have been performing poorly for the past three years. They add that compared to similar retirement plans, the funds performed up to 90 percent worse.
Complainants state that the company has continued to invest funds in Northern Trust in 2017 despite its continued poor performance. In addition to this, the company has also made it the default investment option.
The ERISA Act
Plaintiffs contend that as fiduciaries, Walgreens has failed to act for the benefit of its employees.
They also claim that the company has violated the Employee Retirement Income Security Act (ERISA) because of this.
A fiduciary, or trustee, is a person or an organization that acts on behalf of another person or group.
It should be the fiduciary’s priority to act in the best interest of the people they represent.
Plaintiffs add that as fiduciaries, it is also the companies’ responsibility to monitor the funds’ performance diligently and remove underperforming funds for their client’s benefit.
Complainants attest that Walgreens has failed in its responsibility as fiduciaries by continuously adding underperforming funds.
They add that up until the present, the Northern Trust Funds continues to perform poorly – something that is evident and predictable based on its performance track record.
Northern Trust Performance
Northern Trust reports that in the last quarter of 2020, it has $1.41 million trillion in assets.
According to the company, this is 7% more than the previous quarter and 14% more than the year earlier.
In January 2021, the company has announced that it will be laying off 2.5% of its employees.
It is estimated that around 500 individuals will be affected. According to reports, this will cost the company around $55 million.
Editor’s Note on Walgreens 401K Funds Class Action Lawsuit:
This article is published to inform you of the latest class action lawsuit filed against Walgreens for allegedly driving 401K plans into underperforming funds.
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