Retirement Plan Fee Suit Against TIAA Has a New Angle

In a new twist on excessive fee lawsuits, TIAA (formerly TIAA-CREF) is being sued for excessive fees caused by excessive mailings to retirees and beneficiaries.

In his lawsuit, Jay Lefkowitz, a participant in several plans administered by TIAA says he complained for years about getting separate mailings for each of the 15 accounts from which he was drawing retirement benefits. In some letters and calls he noted that he was not complaining about receiving too many mailings, but about the costs TIAA was incurring that would affect what plans and plan participants pay.

In his complaint, filed in the U.S. District Court for the Southern District of New York, Lefkowitz says “As a fiduciary, TIAA has an obligation to administer the plans economically and in the best interests of the plan and its participants.”

In a statement, TIAA told PLANSPONSOR, “We believe these claims are without merit and will vigorously defend ourselves.”

Lefkowitz is seeking relief individually and on behalf of other similarly situated plan participants, and on behalf of plans administered by TIAA, under the Employee Retirement Income Security Act (ERISA) sections 409 and 502. Among other things, Lefkowitz is asking the court to order TIAA to make good to the plans it administers all losses incurred as a result of the alleged fiduciary breach; to develop cost-effective systems for notifying beneficiaries of deposits to their accounts; to render an accounting of all sums spent on mailing materials; and provide appropriate relief to Lefkowitz and all others similarly situated to reimburse any financial loss as a result of the alleged breach.

Lefkowitz worked for a number of academic and medical employers during the course of his career. He is a participant in the LIU Retirement Account, the NYU Retirement Plan, the Continuum Health Partners, Inc. Plan, the Cabrini Medical Center Plan, the Saint Barnabas Medical Center TDA Plan, the Mobilization for Youth Plan and the Yeshiva University plan—all administered by TIAA. When he first started receiving monthly checks from the plan, TIAA mailed them all in one mailing. However, about eight years ago, TIAA began to send individual statements in separate envelopes. 

In 2008, Lefkowitz starting writing to TIAA to go back to one mailing to save postage costs. In 2009, TIAA was electronically depositing checks into his bank account and sending him 15 separate mailings notifying him of the deposits. In his compliant, Lefkowitz noted that TIAA was paying $63 annually in postage, rather than $4.20. In one letter to TIAA, he pointed out that , assuming a minimum of one million pensioners similarly situated, multiple mailings were costing TIAA at least $60 million per year. 

TIAA said they were exploring the cost and feasibility of a solution, but later said there is no definitive time frame when contracts would be moved to a different platform to allow for one mailing per household. The complaint stated that “TIAA has access to enormous computer programming technology that could be used to provide multiple notices economically in combined mailings.” 

The complaint can be viewed here.