Walgreen Co. has been hit with a lawsuit alleging its "imprudent" decision to keep certain target-date funds in its 401(k) plan caused employees to lose $300 million in cumulative retirement savings.
The lawsuit, brought by 12 current and former participants in the $10.3 billion Walgreen Profit-Sharing Retirement Plan, claims the pharmacy chain "loaded" its 401(k) plan with a suite of poorly performing TDFs, the Northern Trust Focus Target Retirement Trusts.
Fiduciaries to the Walgreens retirement plan had a "deficient" investment selection and monitoring process, according to the lawsuit, Brown-Davis et al v. Walgreen Co. et al. The funds already had a history of underperformance when added to the plan in 2013 and have continued to underperform through the present relative to industry benchmarks and comparable funds offered by peers, plaintiffs claim.
"Walgreen's decision to select the Northern Trust Funds resulted in a swift and devastating blow to participants' retirement accounts," according to the lawsuit, filed Aug. 9 in Illinois federal court.
Margaret Sheehan, a Walgreens spokeswoman, declined to comment because of pending litigation. Doug Holt, a spokesman for Northern Trust, also declined to comment.
Plaintiffs are seeking $300 million to make good on what they claim to be total losses incurred by the 401(k) plan from Jan. 1, 2014 through the present.