Federal Claims Against Milliman, Inc.
Employers offer a number of employee benefits to attract and retain their workforce. One of those very important employee benefits is a retirement savings plan known the 401(k) plan. The Employee Retirement Income Security Act (“ERISA”) is a federal law that governs how employers are to manage their 401(k) plan. It imposes strict fiduciary duties of prudence and loyalty upon employers.
ERISA’s duty of prudence requires fiduciaries to discharge their responsibilities “with the care, skill, prudence, and diligence” that a prudent person “acting in a like capacity and familiar with such matters would use.” ERISA’s duty of loyalty requires a fiduciary to “discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan.” The courts have said that these duties must be performed “with an eye single” to the interests of participants.
Companies that fail to honor these sacred duties can have a significant adverse impact on the retirement savings of their employees. Sanford Heisler Sharp has brought numerous class action lawsuits against companies that have violated their duties. Companies have included Walgreens, Transamerica, and UnitedHealth Group. The number of employees affected approach one million people.
In 2022, Sanford Heisler Sharp filed a claim for breach of fiduciary duties of both loyalty and prudence against Milliman, Inc., a global consulting and actuarial firm based in Seattle, Washington for mismanaging its own 401(k) plan. In 2013, Milliman selected a suite of three brand-new funds—called the Unified Wealth Preservation Funds (“Unified Funds”)—that it and a Kentucky-based bank offered. The Unified Funds are a series of “target risk funds,” which is a type of fund whose primary investment aim is to achieve the highest total return consistent with a level of risk that matches the investor’s risk tolerance (i.e., moderate, moderately aggressive, or aggressive). At the time, the Unified Funds had no track record and the Milliman plan was their sole or nearly sole investor.
The claim alleges the Unified Funds in their first five years in the Plan significantly underperformed all meaningful benchmarks, costing the plan millions of dollars of retirement savings. But Milliman plowed ahead with the underperforming Unified Funds and relied on employees’ money to provide between 97% and 100% of the Unified Funds’ assets. The claim was that Milliman did not adequately address the clear conflict of interest when retaining the poorly performing Unified Funds as investment options for their plan. Over the next five years, through July 31, 2022, the plan’s underperformance cost plan participants tens of millions of dollars in lost retirement savings relative to what they could have earned in similar yet better-performing investments.
Sanford Heisler Sharp's case against Milliman is ongoing in the U.S. District Court for the Western District of Washington. If you are a participant in Milliman’s 401(k) plan and would like to explore your potential legal claims against the company, please relate the details of your circumstances by completing the form at https://www.sanfordheisler.com/contact/