Pension Plan Participants to Receive $80 M
Following an investigation by the U.S. Department of Labor (DOL), a national paint retailer has agreed to pay $80 million to current and former participants in the company’s employee stock purchase and savings plan. The settlement resolves charges that the Cleveland-based Sherwin-Williams Co improperly managed its plan, seeking to take advantage of substantial tax breaks, in violation of the Employee Retirement Income Security Act (ERISA).
The DOL’s investigation focused on two transactions in which Sherwin-Williams and GreatBanc Trust Co. caused the plan to purchase company stock specifically designed for the transactions. The investigation also looked at whether Sherwin-Williams had forwarded employee salary deferrals appropriately to their individual plan accounts.
When fiduciaries expend retirement plan assets, they have to make sure that the plan receives full value for its money, explains DOL.
Investigators concluded that the stock purchases did not provide benefits to the plan and its participants commensurate with the amount the plan paid for the stock. Further, the transactions were not primarily for the purpose of providing benefits to plan participants, nor did they promote employee ownership of Sherwin-Williams. And at times, employee salary deferrals were not properly paid to the plan.
Those who manage retirement plan assets are in a special position of trust and are required by law to always put the interests of the plan participants ahead of anything else. That did not happen in this situation, says DOL.
The agreement also requires GreatBanc to undergo an audit of its pension plan activities and submit a full report on it to DOL.
As of December 2011, the plan had 34,591 participants and nearly $2.5 billion in assets.
Learn more about retirement plans at CBIA’s 2013 Compensation and Benefits Conference, April 10 in Cromwell. Details
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