CEDAR RAPIDS, Iowa (AP) — Transamerica has agreed to a $5.4 million settlement with current and former employees in a lawsuit that accused the investment company of offering several poor performing options in its employee retirement plan.
The federal lawsuit filed in Iowa said the underperforming funds in Transamerica’s retirement plan cost employees between $15 million and $20 million because they performed worse than comparable funds that employees couldn’t choose as part of the plan.
According to the lawsuit, six of the funds that Transamerica set up for employees to choose in their retirement plan underperformed comparable funds by a significant margin over a 10-year period. The employees argued that Transamerica should have spotted the problem and changed the funds.
The company that provides life insurance and investment products didn’t immediately respond Thursday to questions about the settlement. Transamerica is based in Baltimore, but it has major operations in Cedar Rapids, Iowa, and Denver.
Attorney Charles Field, who represented the employees, said roughly 17,000 people are covered by the lawsuit. The amount they will receive from the settlement will be determined by the amount of time they were invested in the funds and how much money they had invested, said Field, who is part of the Sanford Heisler Sharp law firm.
As part of the settlement, Transamerica also agreed hire an outside investment consultant to offer advice on its retirement plan options.
A judge will review the settlement and decide whether to approve it.
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