Retirement plan participants have filed a proposed class action against Ford Motor Co., alleging that the company violated the Employee Retirement Income Security Act (ERISA) by misappropriating funds and charging excessive fees. The plaintiffs claim that Ford used plan assets to pay plan expenses rather than using company funds or employer-matching contributions that employees had forfeited. The Ford retirement plans held more than $25 billion in assets for almost 140,000 plan participants as of December 2024.
The lawsuit also charges that Ford paid over $100 million in administrative expenses over four years to Financial Engines for account services and Alight Solutions for recordkeeping. The participants claim that Ford’s improper usage of their plan contributions cost the plan more than $100 million. For instance, although Alight had contracted with Ford at a rate of $20 per participant, direct recordkeeping fees and indirect payments through Financial Engines’ program increased those fees to $57 per participant. As a result, the proposed class also claims that Ford violated ERISA by failing to monitor existing service providers adequately or by engaging in a competitive bidding process to hire service providers.
The Ford lawsuit is a departure from the most recent slew of retirement plan suits, which mostly accuse companies of improperly using forfeited funds to offset their own contributions, rather than to contain plan costs. In contrast, the plaintiffs in this suit accuse Ford of failing to use forfeited funds to offset the plan’s administrative costs.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
