Compliance January 8, 2025

Northern Trust Reaches $6.9M Settlement Over In-House TDFs

Participants in the firm’s 401(k) plan had sued the company for its alleged failure to regularly monitor plan investments and remove underperformers.

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Northern Trust Co. has agreed to pay $6.9 million to settle a class action lawsuit challenging the use of the firm’s in-house target-date funds for its 401(k) plan.

The settlement agreement in Conlon et al v. The Northern Trust Co. et al., was filed on Monday in the U.S. District Court for the Northern District of Illinois, Eastern Division, and is still pending court approval.

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The lawsuit dates back to 2021, when six participants in the Northern Trust Co. Thrift-Incentive Plan alleged in part that the company’s plan committee failed to prudently select and monitor investment options, both for performance and fees. Specifically, the plaintiffs called out the company’s decision to retain 11 Northern Trust Focus Funds, a target-date-fund suite from the firm’s asset management division, alleging that the funds underperformed consistently while on the plan’s investment menu.

The Northern Trust Focus Funds are organized as a collective investment trust and were the only target-date retirement investment options in the plan, according to the original complaint.

In March 2022, Northern Trust filed a motion to dismiss, arguing that the plaintiffs failed to cite a reasonable claim that the committee breached its fiduciary duties. However, in August 2022, U.S. District Judge Charles Ronald Norgle denied Northern Trust’s motion to dismiss the case. Norgle ruled that the plaintiffs had made enough of a case that the plan committee had neither sought the best investment options nor negotiated enough for the lowest fees.

Both parties announced in October 2024 that they had reached a tentative settlement agreement.

The Northern Trust Co. Thrift-Incentive Plan holds more than $2.9 billion in assets and has 14,170 participants, according to its 2023 Form 5500 filing.

According to the settlement agreement, the plan’s recordkeeper will provide the settlement administrator with all information necessary to send the settlement notices and carry out the plan of allocation no later than 10 business days before the notices are to be distributed.

The settlement applies to all participants and beneficiaries of the 401(k) plan who were invested in the Northern Trust Focus Funds at any time on or after June 1, 2015.

The plaintiffs in the case are represented by the Law Offices of Michael M. Mulder and Scott+Scott Attorneys at Law LLP, while Northern Trust is represented by Willkie Farr & Gallagher LLP.

Compliance January 7, 2025

PBGC Names Anne Henderson as New Participant and Plan Sponsor Advocate

Henderson, on January 12, will succeed Constance Donovan, who retired in August after 11 years.

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The board of directors of the Pension Benefit Guaranty Corporation announced Tuesday the appointment of Anne Henderson as its participant and plan sponsor advocate, effective January 12. Henderson, currently a management and program analyst in the PBGC’s Office of Policy and External Affairs, succeeds Constance Donovan, who retired last August after 11 years at the PBGC.

The PBGC Office of the Advocate works with defined benefit plan participants to ensure they receive benefits from the PBGC to which they are entitled. The office also works to resolve disputes between plan sponsors and the PBGC.

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“The board is pleased to have selected Anne Henderson to serve as the next advocate, and we look forward to working with her and the dedicated staff of the Office of the Advocate to continue to promote and support defined benefit pension plans and the participants and beneficiaries they serve and provide valuable insight into how PBGC can best serve the public,” said Julie A. Sue, acting secretary of labor and chair of the PBGC’s board of directors, in a statement.

In addition to Henderson, the Office of the Advocate includes Camille Castro, senior associate participant and plan sponsor advocate, and Emily Spreiser, associate participate and plan sponsor advocate.

“I’m thrilled and honored to serve as the next PBGC Participant and Plan Sponsor Advocate, a unique role that assists plan sponsors and participants in PBGC-trusteed plans in resolving disputes with PBGC,” Henderson said in a statement. “Improving customer service has been the common thread of my federal career. I look forward to building on the efforts of the previous advocate and with Camille and Emily in the Office of the Advocate to ensure that PBGC continues to serve its customers by providing the board and Congress with an independent perspective and outlook on PBGC and the defined benefit pension system.”

Henderson has been at the PBGC since 2008, following a five-year stint as a public affairs specialist at the U.S. Department of Agriculture. She earned a bachelor’s degree in English language and literature from George Washington University.

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