Class-Action Suit Over Allstate 401(k) Plan Can Go Forward

"Financial Engines charged higher fees," according to the lawsuit. "So, the more money in a participant's account, the more money Financial Engines and Alight made, even though no additional costs or services had been rendered. From 2015 to 2019, plan participants paid Financial Engines and later Alight anywhere between $1,265,509 and $2,667,972 in annual advisory fees."

The plaintiffs also alleged that Allstate "constructed a plan with far too many layers of fees, and for participants who signed up for Financial Engines (and later, Alight), the total fees were so high it was difficult to break even on their investments."

The plaintiffs alleged that Allstate and its plan fiduciaries "turned a blind-eye to a pay-to-play kickback scheme" between Financial Engines and the plan's recordkeeper that exclusively featured Financial Engines to its clients.

As for Northern Trust, the TDFs "performed worse than 70 to 90 percent of comparable funds, but the Allstate defendants failed to remove the suite as the plan's default retirement investment option," the plaintiffs stated.

Shah dismissed the defendants' motion, asking for defendants to file a status report with proposed discovery schedule by Oct. 26.

Separately, Northern Trust was hit in June with a class-action suit by its own current and former employees for loading up its retirement plan with poorly performing proprietary target date funds. The firm said in a statement at the time that it "believes the Northern Focus Funds have been an appropriate vehicle for retirement savings, and plans to defend itself from the lawsuit's claims."