The complaint says the target-date funds used in the plan and as the designated default investment were underperforming since they were selected, resulting in a great loss to participants.
By Rebecca Moore / PLANSPONSOR
The complaint notes that as fiduciaries, the Walgreen defendants must prudently curate the plan’s investment options. They must regularly monitor plan investments and remove ones that become imprudent. The lawsuit alleges that the defendants breached these fiduciary duties by adding to the plan in 2013 a suite of poorly performing funds called the Northern Trust Focus Target Retirement Trusts and keeping these funds in the plan despite their continued underperformance.
Despite a market “teeming with better-performing alternatives,” the plaintiffs say, Walgreen selected the Northern Trust Funds, which already had a history of poor performance. According to the complaint, they had significantly underperformed their benchmark indexes and comparable target-date funds since Northern Trust launched the funds in 2010.
The lawsuit contends it was predictable that the Northern Trust Funds continued underperforming through the present. For nearly a decade, these investment options performed worse than 70% to 90% percent of peer funds, according to the complaint. The plaintiffs say not only does Walgreen refuse to remove the funds, it has actually added Northern Trust funds to the plan’s investment lineup, and selected the Northern Trust target-date funds as the plan’s default investment.