PHILADELPHIA – The University of Pennsylvania is one ofseveral universities being sued by employees amid allegations that the schools’retirement plans come with excessive fees.

In addition to the University of Pennsylvania, complaintswere filed on behalf of employees of Duke University, Johns Hopkins University andVanderbilt University. Before the latest round of complaints, lawsuits werealso filed against the Massachusetts Institute of Technology, New YorkUniversity and Yale University.

In these lawsuits, the employees allege that the schools areusing more than one “record keeper” to oversee and administer their pensionplans. The suits claim that if the plans were run by just one provider, lower feescould have been negotiated. They said this would save the pension plansmillions of dollars in fees incurred each year.

“Penn has a $3.8 billion plan, yet it has retail mutualfunds in it, which in some cases are 300 percent more expensive than identicalinstitutional mutual funds, except for fees,” plaintiffs’ attorney Jerome J.Schlichter of Schlichter Bogard & Denton told the Pennsylvania Record.

In addition, the employees allege that the universities’current plans give participants too many expensive choices for investment, evenwhen less expensive options were available. The plaintiffs also claim themyriad overpriced investment options are too confusing for plan participants.

Schlichter said Penn’s plan has two record keepers andoffers more than 75 investment options to plan participants.

“The plan has numerous investment options in the sameinvestment style, which all studies show leads to confusion among employees andretirees, and is very different from industry standards,” Schlichter said. “Justreading the prospectuses from such a large number of options, many of which areduplicative, would take employees many days if they did nothing else.”

The lawsuit states that there was no prudent process forselecting the plan options, but that there should be.

“A prudent fiduciary responsible for handling someone else’smoney, as the Penn fiduciaries are, would not have run the plan this way,”Schlichter said. “Fees in 401(k) plans have come down significantly, but those inthe Penn plan have not.”

Schlichter said the purpose of the lawsuit is to compensatePenn employees and retirees for what has happened in the past and to enablethem to build a meaningful retirement in the future.

“Penn employees and retirees, whether they be hourly workersor professors or anyone else, have the same right to build their retirementassets as employees of corporations have,” Schlichter said. “A plan of thisenormous size can command far lower fees for its employees and retirees than a$250 retail investor can, yet the Penn plan has these very expensive retailfunds.”

Instead of the more well-known 401(k) retirement plans, thepension plans at the center of the universities’ lawsuits are 403(b) plans.Although these plans do share many of the same characteristics of thetraditional 401(k), they are more commonly used by public schools,universities, hospitals and other non-profit institutions that offer pensionplans to their employees.