The US Department of Labor has reached a landmark settlement agreement with ING Life Insurance and Annuity Co., resulting in a $5.2 million payment to retirement plan clients. This settlement aims to compensate individuals who were adversely affected by ING Life Insurance and Annuity Co.’s undisclosed practice of keeping investment gains when requested transactions were not processed promptly.
Ensuring Transparency and Protecting Retirement Savings
The Department of Labor alleged that ILIAC’s failure to disclose its policy on reconciling transaction processing errors to retirement plan clients violated the Employee Retirement Income Security Act. The settlement agreement addresses this issue and aims to restore funds to approximately 1,400 retirement plans, benefitting hard-working Americans who are saving for their retirement years.
Acting Secretary Seth D. Harris expressed his satisfaction with the settlement, stating, “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.” The settlement represents the Department of Labor’s commitment to transparency and accountability in the retirement savings marketplace.
Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi added that ILIAC’s failure to disclose the revenue it received from managing retirement plans is a disservice to employers who offer this benefit to their workers. The settlement aims to rectify this situation and enforce transparency requirements within the retirement savings marketplace.
Settlement Terms and Disclosure Policy
In addition to the $5.2 million payment, the settlement agreement requires ILIAC to disclose its policy on correcting transaction processing errors to plan clients governed by ERISA (Employee Retirement Income Security Act). ILIAC is also required to adopt procedures for terminating abandoned plans through the Employee Benefits Security Administration’s Abandoned Plan Program.
ILIAC has agreed to pay a civil penalty of $524,508.73. This penalty represents net gains that the company kept as a result of mishandled transaction errors during the 2008-2011 period. ILIAC’s practice was to retain gains derived from delayed processing of transactions and erroneous transactions. Any gains in share or unit value between the contract date and trade date were kept by ILIAC, while the company was contractually obligated to compensate for any losses.
The settlement agreement mandates that ILIAC provide full disclosure of its transactions policy to current and prospective ERISA plan clients in writing. Current plan clients will have the opportunity to object to the policy within 30 days of receiving notice. Prospective plan clients will be informed of the policy through its incorporation in ILIAC’s contracts and service agreements.
ILIAC is also required to track and make information available to its ERISA plan clients regarding the effect of corrections on each affected plan on an annual basis. The disclosure will acknowledge that any gains retained by ILIAC as a result of the policy constitute additional compensation for the company’s services and will be reported in accordance with ERISA Section 408(b)(2).
FAQs
Q: Who will benefit from this settlement?
A: Approximately 1,400 retirement plans and their participants will be compensated as a result of this settlement.
Q: What is ILIAC’s obligation regarding abandoned plans?
A: ILIAC will make efforts to contact the sponsors of abandoned plans and, if unsuccessful, will become the qualified termination administrator for those plans.
Conclusion
The US Department of Labor’s $5.2 million settlement with ING Life Insurance and Annuity Co. is a significant step towards ensuring transparency and protecting retirement savings. This landmark agreement restores funds to retirement plan clients who were adversely affected by ILIAC’s undisclosed practice. By enforcing transparency requirements and implementing proper procedures, the Department of Labor aims to safeguard retirement savings and provide individuals with a clear understanding of how their investments are being managed.
