Principal faces lawsuit over retirement service fees
March 26, 2014 by IFAwebnews Staff
Principal Life Insurance Co., a division of Des Moines, Iowa-based Principal Financial Group, was recently hit with a lawsuit claiming it is overcharging for its retirement services.
McCaffree Financial Corp., based in Overland Park, Kan., alleges in the suit that Principal is charging “grossly excessive” fees on a retirement plan Principal operates for McCaffre.
McCaffree filed its putative class action lawsuit in federal court claiming Principal Life violated Employee Retirement Income Security Act (ERISA) laws as a retirement plan administrator by charging excessive fees to defined-contribution retirement plans and breaching contracts.
It also says Principal structures the retirement plans by creating separate accounts that end up investing in Principal-owned mutual funds. Subsequently, Principal receives more fees on top of fees charged by its own mutual funds, the suit alleges.
McCaffree filed the lawsuit in U.S. District Court for the Southern District of Iowa.