Washington, DCING Life Insurance and Annuity Co. will reportedly pay more than $5 million to settle an ERISA lawsuit filed by the US Labor Department. The ERISA benefits lawsuit alleged the company violated the Employee Retirement Income Security Act (ERISA) in its handling of retirement plans for clients.
According to the US Department of Labor (in a news release issued on 2/4/13), the lawsuit alleged ING Life Insurance and Annuity Co. kept investment gains that were obtained when the company did not carry out requested transactions related to retirement plans in a timely way. In other words, ING made money when it did not process transactions its clients requested quickly enough. Money was made if the share or unit value was different on the contract date compared with the trade date. Rather than giving that money to the client, ING kept the money, according to the lawsuit.
By not telling its clients about that policy, ING allegedly violated ERISA laws. “Failure of a plan fiduciary to disclose the revenue it received from managing retirement plans is a disservice to employers who are providing this benefit to their workers,” said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi.
Approximately 1,400 retirement plans are affected by the settlement. In addition to paying $5.2 million to settle the lawsuit, ING will also disclose its policy on correcting transaction-processing errors and will properly terminate plans that are deemed abandoned through the Employee Benefits Security Administration’s Abandoned Plan Program. The $5.2 million represents financial gains to ING from 2008 to 2011, due to its policy on transaction errors. Another $524,000 will be paid in civil penalties.
“All of us who are planning for retirement deserve to know how our savings and investments are being handled, how much is being charged in fees and how much these transactions impact final account balances,” said acting Secretary Seth D. Harris.
ING has approximately 35,000 ERISA-covered clients. Under the settlement, existing clients will be given the opportunity to object to the policy.
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