Data and Research December 5, 2023

Fidelity: Retirement Plans Have Increased Focus on Recruiting, Retaining Workers

Plan sponsors’ satisfaction with meeting their goals has also increased, according to Fidelity Investments’ annual survey.

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Although plan sponsors remain focused on achieving employee retirement readiness, 25% of sponsors reported that attracting and retaining top employees was a top goal for their retirement plan, a notable increase from 18% in 2021, according to a Fidelity Investments study.

Fidelity’s 2023 Plan Sponsor Attitudes Survey found that the top plan sponsor retirement plan goals included providing adequate retirement savings so participants can successfully replace income from their working years (36%) and ensuring plan participants save at a specific rate throughout their working years until retirement (26%).

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For plan sponsors’ top plan design changes made in the past two years, three areas tied, each getting 26% of responses:

  • Increasing the matching contribution amount;
  • Increasing to the automatic enrollment deferral rate; and
  • Beginning to offer an income replacement fund.

Fidelity Investments’ institutional insights, focusing on retirement plan evolution and participant engagement came from data points within the 2023 Plan Sponsor Attitudes Survey. Fidelity periodically releases slices of research and data, examining plan sponsors priorities and insights.

In this year’s survey, plan sponsors “reported that they were highly satisfied with their retirement plans meeting their goals,” according to the 2023 Plan Sponsor Attitudes Survey highlight.

General satisfaction with retirement plans meeting their goals remained at a multi-year high of 74% in 2023—76% for plans that use a retirement plan adviser, as compared with 65% for plans without an adviser—a far cry from the 59% recorded in the inaugural survey back in 2008.

“As the economy, fiduciary environment, and available investment options continue to become more complex, plan sponsors and advisors need to work together to help more participants become retirement ready,” the Fidelity report stated.

Fidelity’s Plan Sponsor Attitudes study has examined plan sponsors’ priorities and detailed insights since 2008. It is based on interviews with more than 13,000 sponsors.

Compliance December 5, 2023

Tyson Foods Hit With 401(k) Suit for Overcharging

Employees allege the Tyson Foods plan committee did not monitor and negotiate for reasonable recordkeeper fees.

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Tyson Foods Inc.’s retirement plan committee is the defendant in a class action complaint filed by three employees accusing the Arkansas-based meat production company for passing on to participant excessive fees for 401(k) recordkeeping done by Northwest Plan Services Inc.

The complaint, Ruebel et al. v. Tyson Foods Inc. et al., was filed Thursday in the U.S. District Court for the Western District of Arkansas. Plaintiffs are seeking class action status for the Tyson 401(k) plan that, by year-end 2022, had 67,276 participants and $3.2 billion in assets, according to BrightScope, which, like PLANSPONSOR, is owned by ISS STOXX.

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In the complaint, the plaintiffs allege that during the class action period from November 30, 2017, through the date of judgement, Tyson’s plan committee breached two fiduciary duties. First is an allegation of “violation of the duty of prudence against defendants” for “charging plan participants excessive total RKA fees.” Second is an allegation that defendants failed to “monitor fiduciaries responsible for plan administration with regard to plan total RKA fees.”

The first count argues that, among other allegations, the defendants paid “over a 75% premium per-participant for total RKA fees” at an average of $42 per participant.

The complaint contains analysis of what the plaintiffs called comparable plans, including those administered by Fidelity Investments, Alight and the Vanguard Group, with total fees between $20 and $32. It also aggregated those comparable plans to show that, according to its figures, Tyson Foods plan should have been charging around $27 per participant on average for the market at that time.

“Defendants should have lowered its total RKA fees by soliciting bids from competing providers and using its massive size and correspondent bargaining power to negotiate for fee rebates, but it did not do so, or did so ineffectively, during the class period,” the plaintiffs allege.

To argue the scale of the plan, the plaintiffs note that Tyson Foods’ plan had more participant than 99.98% of the defined contributions in the U.S., and more assets than 99.97% of plans.

The second count alleges a breach of fiduciary duty for “failing to monitor those individuals responsible for paying these unreasonable total RKA fees.”

The complaint does not name recordkeeper Northwest Plan Services or any other administrators or providers of the plan.

Neither Tyson Foods nor Northwest responded to requests for comment on the complaint.

Legal firm Euclid Fiduciary, which tracks retirement plan litigation, noted in August that excessive fee and investment imprudence litigation was tracking lower in 2023 than the year prior—but the experts also noted that the plaintiffs’ bar was getting more intelligent in their arguments. At the time, the firm forecast 45 such complaints in 2023, up from 89 in 2022.

The complaint alleges Tyson Foods cost the plaintiffs and class members millions of dollars of harm, and it seeks to recoup those losses for all plan members.

The plaintiffs are being represented by the law firms of Walcheske & Luzi LLC and Carney Bates & Pulliam PLLC.

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