November 10, 2022
- COURT: D. Mass.
- TRACK DOCKET: No. 3:22-cv-30147
- JUDGE: Mark. G. Mastroianni
- COMPANY INFO: Massachusetts Mutual Life Insurance Co.
Massachusetts Mutual Life Insurance Co. cost its employees tens of millions of dollars in retirement savings by using its own proprietary funds and recordkeeping services in their $4.1 billion retirement plan, according to a former employee’s federal lawsuit.
The proposed class action, filed Wednesday in the US District Court for the District of Massachusetts, accuses the company of improperly profiting off its workers’ retirement savings by putting its own expensive and poorly performing proprietary funds in their 401(k) plan. MassMutual also failed to choose the cheapest available share classes of these funds and put a substantial amount of the plan’s assets in its own general account through a stable value fund, which benefited the company financially while subjecting workers to increased risk, plaintiff Judy Lalonde alleges in the complaint.
Lalonde’s lawsuit also takes aim at the company’s decision to use a corporate affiliate as the plan’s recordkeeper. This allowed MassMutual to make additional money off the plan, and it further benefited the company by allowing it get a better price when it sold its retirement business to Empower Retirement in 2021, according to the lawsuit.
Over the past few years, MassMutual “brought in well over $50 million in compensation directly from the Plan’s investment in its proprietary products, all while using the Plan as an anchor client to support its marketability and corporate initiatives, like the sale of the Company’s retirement business to Empower for $2.35 billion,” Lalonde alleged.
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Attorneys: Cohen Milstein Sellers & Toll PLLC represents Lalonde and the proposed class.
Read the story on Bloomberg Law.