Credit: Rafael Henrique/Adobe Stock
A Virginia federal judge has dismissed—for the second time—a lawsuit against engineering and construction firm Bechtel Global Corp. The suit argued that the company’s retirement plan fiduciaries “breached their fiduciary duty” because the firm’s default managed account option was no better than a target-date fund.
U.S. District Judge Anthony J. Trenga of the U.S. District Court for the Eastern District of Virginia tossed the lawsuit out last week, marking the second dismissal of retiree Debra Hanigan’s case. She alleged that Bechtel’s choice of a managed account for its Employee Retirement Income Security Act (ERISA) plan default investment led to excessive fees and subpar returns, arguing that a target-date fund (TDF) would have been a better alternative. However, in his second ruling, Judge Trenga found Hanigan’s amended complaint inadequate since it still did not establish that the managed account and TDF were sufficiently comparable, calling her fee claims unsupported by a “meaningful benchmark.”
Recommended For You
Last June, Bechtel was sued over the fees retirement plan participants paid after being defaulted into managed accounts, which the ERISA lawsuit claimed were “essentially expensive target-date funds.” But the firm secured another court order dismissing a retiree’s proposed class action saying the engineering firm mismanaged its $5.7 billion retirement plan by defaulting workers into a pricey managed account service. In that suit, Hanigan v. Bechtel Global Corp., participant-plaintiff Hanigan claims that the plan fiduciaries of the Bechtel Trust and Thrift Plan “breached their fiduciary duty … causing tens of millions of dollars of harm to plaintiff and class members’ retirement accounts.” The suit also alleged that Bechtel violated its fiduciary duty “by failing to monitor the fiduciaries responsible for plan administrative fees” by defaulting plan participants into the managed account option, which was “essentially expensive target-date funds, focused on the single demographic factor of age.”
As a result, the suit claims, the Bechtel Plan cost its participants approximately $4.7 million per year in additional recordkeeping fees, “which equates to, on average, approximately $293 per participant per year”—and that, “by using the Empower managed account program,” the plan cost its participants “a total, cumulative amount in excess of $23,555,043.” As a result of the managed account program, “the plan and the plan participants have less money, and Empower and Financial Engines earned tens of millions of dollars without providing any benefit or value to the Bechtel Plan and its participants,” according to the lawsuit.
Last October, Judge Trenga ruled that the suit failed to make a “plausible” case with “meaningful benchmarks” and dismissed the suit, albeit with an opportunity to amend the suit to address those shortcomings. In a January 10 opinion, Judge Trenga said the retiree’s latest complaint still fails to provide a meaningful benchmark by which to judge the fees charged by Bechtel’s managed account service.
————————————————————
From: BenefitsPRO
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
