The Coca-Cola Bottlers’ Association has agreed to settle for $3.3 million a claim brought against it by a former employee under the Employee Retirement Income Security Act in the U.S. District Court for the District of Kansas. The court has yet to approve the proposed settlement in the case, Kimario Anderson v. Coca-Cola Bottlers’ Association.
The multiple employer plan sponsored by the association is composed of 65 independent bottlers for Coca-Cola. As of 2021, it had approximately $973 million in assets under management. The initial complaint, brought in February 2021, alleged that the association had paid overpriced management and recordkeeping fees and had kept an undiversified Coca-Cola Common Stock Fund in its investment menu.
In March 2022, the majority of this claim was dismissed. The court ruled that the plaintiff could not challenge the Coca-Cola Common Stock Fund because he had not invested in it personally and the complaint that it was undiversified made it discrete from other allegations of high fees. That resulted in the plaintiff’s ineligibility to challenge it on the grounds that it was part of a broader flawed process of negotiating fees. The court also dismissed the allegation of excessive recordkeeping fees because the plaintiff did not discuss the services that the recordkeeper, Wells Fargo, had provided in its analysis of the cost.
However, the court did rule that the claim against the association for maintaining a T. Rowe Price mutual fund called the Equity Index 500 Fund, which the plaintiff alleged charged fees grossly higher than funds with similar composition, could proceed. The court upheld this in part because the plaintiff identified instances of the plan dropping overpriced funds in the past, but not this one, which is a sign of an incomplete or flawed process under ERISA and therefore more than a mere sampling of better alternatives.
On March 23, the association filed a brief in support of a settlement for $3.3 million, which will be put into a fund accessible to other, as yet undeclared, members of the class. Other expenses, such as attorneys’ fees, will be subtracted from this amount, leaving the remainder for class members. The plan also retained Gallagher Fiduciary Advisors to review the settlement.
The proposed and agreed settlement must still be approved by the court before being finalized.
Employers are building into retirement plans and beyond benefits to help workers gain greater financial security, financial freedom and overall financial wellness.
Research shows that greater employee financial wellness often translates to fewer distractions and more productivity on the job. It also affects employers’ retirement plans, because workers who have sufficient emergency savings, minimal credit card and student loan debt generally have lower financial stress and can save more of their salary for retirement.
For employers, the definition of financial wellness varies, ranging from everyday budgeting and day-to-day financial behavior to long-term savings.
PLANSPONSOR spoke to numerous retirement industry sources and compiled their responses to the question, What does financial wellness mean to you?
Gerald Wernette
Principal and director of consulting services, Rehman
“I would sum up financial wellness as: Tools and resources to better educate employees and plan participants on the resources that are out there, that are available to them and how best to utilize what’s at their disposal as far as their own personal income and other resources. [It’s] trying to marry the two, help educate, help people understand A) what’s out there and B) how to best utilize it for themselves.”
Brian Coleman
Vice president of total rewards, Dawn Food Products
“We are an early adopter of financial well-being. We started our journey back in 2008, so it’s very popular, it’s a great buzzword today, but we’ve been doing it since ‘08. We started very early with looking at what do team members across the board need? How do they save more? How are they happier? How do we look at getting more people involved? [Because] if you’ve got more money in your pocket, you’re more apt to be happier.”
Rob Austin
Head of research, Alight Solutions
“Financial wellness for employers means having their workers be able to cover their current expenses, plan for the future and deal with anything unexpected along the way. So when you look at that framework, employers are offering tools that kind of help things in all three of those buckets. Some employers will offer things that will help a worker set a budget or help a worker with managing debt, [or help a worker with] a student loan program or something that’s just designed to [remind people], ‘Hey, [this can] help get your debt under control.’ We’ve even seen some employers help with refinancing of mortgages, [benefits] that can help with getting today’s expenses under control and [resources that help] planning for the future.”
Amber Brestowski
Head of institutional investor advice and client experience, Vanguard Group
“At Vanguard, how we think about financial wellness is [addressing] things that from a participant’s ability to be able to retire successfully.For us, that really falls into sort of three categories. The first is debt and expense management. Student loan debt is a great example of that, and [people] need help understanding how to get the expense and debt side of their balance sheet under control, so they can even envision saving for retirement. Credit card debt is another example of one of the challenges that are faced that’s facing our participants
The second pillar is emergency savings: having the ability to withstand financial shocks. We want participants to be able to handle expenses, and obviously making sure they have the right cash reserves and liquidity to handle a financial shock is really important before, again, they can even contemplate saving for retirement.
The last category is multigoal savings, this idea that our participants are often thinking about competing financial priorities: How do I think about balancing saving for a home, saving for a child’s education, saving in some instances to take a sabbatical and time out of the workforce, which we’re seeing more and more, and how do I how do I stack those objectives against retirement if I have a discretionary dollar?
Zara Nanu
CEO and co-founder, Gapsquare
“There’s a photo [showing] two kids watching a football match, and it’s behind a fence. Then one of them stands on a box and another one doesn’t, and then they have different viewings because of that. I think we started seeing equity as them standing on different-size boxes that ensure that they have the same viewing over the fence: So how do you put them on equal footing?
I think we are now moving towards a world where, How do we actually just remove the fence in front of them so it doesn’t matter where they are [and] they can have the same viewing of the game? It’s removing those barriers in terms of education, in terms of [the] language we use in terms of our historical baggage of what those [employer benefit] plans mean, how we interpret them and how they link into our economies and overall financial institutions.”
Sandy Gleason
Vice president of industry consulting, Alegeus
“Employers understand, and they need to understand, that there are four generations in the workforce now coming from all types of backgrounds, demographics, and there’s a need for those employers to meet employees where they are in their life journey. That’s what it means to me: understanding that…the one-size-fits-all doesn’t work any longer—that employees have different needs at different times in their lifetime, and employers need to meet them where they are now.”
Nicky Brown
Vice president for advocacy and government affairs, HealthEquity
“What first comes to mind is: I think that there’s certainly some inequities when you think about financial wellness. I think [financial] literacy is a big part of that where you have so many demographics that don’t understand financial literacy. We’d actually take a look at some socioeconomic information, as it relates to our products, and understanding that you have lower-income individuals that may not participate in a particular plan because they feel like they can’t afford it, and thinking about how employers can help … bridge the gap with these lower-income workers.
’How do you get access to these benefits to individuals [who] may not think that they can afford it? When there’s only a few vehicles that can even help them when they have these higher, out-of-pocket [health care] costs.
[When] you think about, in retirement, how much money you’re going to need for just health care alone, [wellness is also] starting to talk to employers about how they can bridge the gap, and employers looking at benefits a little bit differently, plays a part in that.”
Nick Maynard
Senior vice president, Commonwealth
“For Commonwealth, that means thinking about financial benefits that impact workers who are living on low-to-moderate incomes, and … beyond just retirement, what benefits folks might need as part of a financial wellness strategy to get them on the road to, potentially, retirement. One of the things, obviously, that we think is important is that emergency savings programs and benefits can move the needle. We think that emergency savings is a foundational, do-no-harm pillar of inclusive financial wellness strategy, and we think it can be a core part of financial benefits that are designed to meet the needs of a diverse workforce.”
Ilyce Glink
CEO and founder, Best Money Moves LLC
“I think [the term] is confusing employees. Financial wellness means, ‘I want to feel better about my money, have less stress and stop staying up all night worrying if I can make ends meet.’ And of course, 64% of Americans are not making ends meet. To employers, financial wellness is, ‘How do I get my employees to stop knocking on my door with their credit card debt questions?’
From an employer point of view, it’s about flexibility: ‘How do I bring new people on, how do I keep people, what are other benefits I need to offer these days?’”
Jay Schmitt
Principal, Strategic Benefits Advisors
“A lot of financial wellness programs have come online in the last five to 10 years that can help you make budgets and stick to budgets. … That’s really what the conversation needs to be about: How do you take a limited resource of money and apply it across your personal situation?”
Anqi Chen
Senior research economist, Center for Retirement Research, Boston College
“Why do employers offer financial wellness programs to their employees? I think it is to improve their financial security. It’s clear with programs that are actually giving [employees] money that improves their financial wellness. If your goal is to improve the balance sheet or their wealth in some way, then giving them money helps achieve that goal.
’’The goal of financial wellness programs is to improve the financial security of participants. The direct measurement of that would be, ‘Does the [program] actually improve the financial security of participants?’ Financial security can be measured in different ways, but it’s generally, ‘Do people have more money? Do they have more savings? Do they have less debt?’
For emergency savings, ‘Do they have a little pile they can tap into?’”