Supreme Court passes Ruling in favor of Edison International’s Employees
On Monday, the Supreme Court passed a ruling in favor of participants of 401(k) plan who objected the employers for offering investment options that damage their retirement savings through excessive fees.
Earlier, current and former employees of Edison International, public utility holding company based in Rosemead, filed complaints against the company. Now, the Supreme Court has revived claims by the employees. According to the employees, the company selected mutual funds with excessive fees.
According to reports, the energy company gives its employees about 40 mutual funds to select from in figuring out how to invest. The employees argued that the company did not act in their favor by choosing the higher-cost funds. Even a small jump in fees could result into a significant effect on earnings, as per the reports.
A fee of only 1% could remove approximately $70,000 from an average employee's account. A recent study conducted by the Center for American Progress stated that money would be erased from a worker's account over a career of forty years. The Center for American Progress is a progressive public policy research and advocacy organization.
The claims by the Edison employees were dismissed by a federal appeals court. The claims were dismissed under the federal Employee Retirement Income Security Act. According to the appeals court, the lawsuit by the employees was filed too late.
But, Justice Stephen Breyer did not agree with the appellate decision. Breyer said, "People in charge of investment options have an ongoing responsibility to monitor the situation. The continuing duty to review investments includes a duty to remove imprudent investments".