New York Life Insurance Co. agreed to settle for $3 million a lawsuit that claimed it breached its fiduciary responsibilities in its 401(k) plans.
"While we believe we have acted in full compliance with the duties owed to our plan participants, we have decided that the best use of resources is to fund a settlement rather than litigation," Kevin Maher, corporate vice president of external communications for New York Life, said in an emailed statement. "The company's retirement plans continue to be a valued and important part of the high quality, comprehensive benefits package we provide to employees and agents."
The class-action complaint, which was filed on July 18, 2016, claims plan participants were financially harmed when New York Life kept the MainStay S&P 500 Fund in the plans' investment lineup when a less expensive alternative investment was readily available from Vanguard.
The complaint alleges that the MainStay S&P 500 Fund is managed by affiliates of New York Life Insurance Co., and the plans' fiduciaries profited from the "alleged imprudent retention" of the MainStay S&P 500 Fund in the plans.
According to the complaint, it was imprudent for the plans' fiduciaries to retain the MainStay S&P 500 Fund because the MainStay S&P 500 Fund had annual costs of 35 bps (0.35%) per year, whereas a comparable index fund offered by Vanguard had annual expenses of only 2 bps (0.02%) per year.
The MainStay S&P 500 Fund was included and retained in the plans' investment lineup from the beginning of the class period in 2010 until July 19.
