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Following UnitedHealth Group’s recent record-setting $69 million settlement in a class-action lawsuit alleging that the company depleted the retirement savings of workers for years by selecting “underperforming” funds in the company 401(k) plan, now comes a proposed $100 million Nokia 401(k) lawsuit. The suit was filed last week by two former employees who allege that Nokia failed to uphold its fiduciary duty under Employee Retirement Income Security Act (ERISA) and that the telecommunications equipment maker’s retirement plan is plagued by poorly performing funds.
The proposed class-action ERISA lawsuit, Sims et al. v. Nokia of America Corp. et al., filed in New Jersey federal court, centers on two funds offered by the $9 billion 401(k) plan covering more than 27,000 current and former Nokia employees. These investments held about 11 percent of the plan’s assets and drove millions of dollars in losses by underperforming competitors, alleged former employees James Sims and Antonio Smith, on behalf of the Nokia Savings/401(K) Plan .
Nokia has “failed to prudently invest, monitor, and adjust the plan’s holdings,” said the plaintiffs. The U.S. Large Cap Growth Equity Fund, worth $786 million, remained in Nokia’s retirement plan lineup from 2000 to May 2024, despite years of lackluster performance, allege the plaintiffs. Moreover, the International Equity Fund, which has approximately $213.69 million in assets under management, “has underperformed over a 5-year and 10-year period, as well as underperforming since the inception of the fund,” according to the suit.
These “failures … cost the plan—and its participants—more than $100 million,” the suit states.
The suit concludes that Nokia, as well as Nokia Pension and Benefit Investment Committee, have “breached their fiduciary duties by failing to establish and follow a prudent process for investigating, evaluating, and monitoring investments.”
This Nokia case adds to a rising wave of lawsuits scrutinizing how major corporations manage employee retirement funds, with more likely to come. In April, the Supreme Court took a worker-friendly approach on behalf of 28,000 employees who accused Cornell University of paying excessive 403(b) plan recordkeeping fees.
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From: BenefitsPRO
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