CITRUS COUNTY, Fla.--(BUSINESS WIRE)--The Foundation Resolution Corporation (FRC), a not-for-profit formerly known as the Citrus Memorial Health Foundation that operated Citrus Memorial Hospital, today filed a multi-million dollar breach of fiduciary action on behalf of the Citrus Memorial Health Foundation, Inc. Pension Plan (the Plan) in the United States District Court for the Middle District of Florida against Aon Hewitt Investment Consulting, Inc., formerly known as the Hewit EnnisKnupp, Inc. and one of its affiliates, Alight Solutions LLC, formerly known as Hewitt Associations LLC (collectively, AON).
The Complaint contends that the Foundation’s pension plan was forced to borrow millions of dollars to ensure that its more than 1,000 participants received all of their benefits before termination after AON allegedly mismanaged the Plan’s investments.
As detailed further in the Complaint, FRC asserts that AON pursued a flawed investment strategy using a thinly-traded set of proprietary Aon Hewitt Group Trust mutual funds in effort to match the duration of the Plan’s assets to its liabilities. Although such a strategy, known as liability-driven investing, has become common among pension plans, FRC claims AON’s use of a poorly-monitored mix of its own proprietary mutual funds botched the Plan’s investments by causing significant, undisclosed durational mismatches that resulted in millions of dollars in losses.
The Complaint goes on to assert that AON not only failed to properly monitor or adjust the Plan’s investments but also failed to timely liquidate them out of the Aon Hewitt Group Trust when the Plan needed to come up with more than $89 million in cash to purchase a terminal group annuity contract for its participants at termination.
Compounding matters, the Complaint also alleges that while AON initially touted its experience as grounds to expect an 80-percent lump-sum benefits election rate that would result in millions of dollars in savings to the Plan, after a protracted delay during which AON continued to charge the Plan quarterly fees totaling more then 36 basis points on all assets under its management, AON ended up achieving a lump-sum election rate of only 67%.
To view the Complaint in full, please visit http://citruscountyhospitalboard.com/pdf/frc-vs-aon-federal-lawsuit-for-recovery-of-lost-pension-money.pdf.
FRC and the Plan are represented by the Orlando-based law firm of King, Blackwell, Zehnder & Wermuth, P.A. Additionally, the FRC has retained field experts, including Professor Kent Smetters, Ph.D., a well-known economist at the University of Pennsylvania Wharton School, member of the Editorial Board of the Journal of Pension Economics, and member of the Board of The Pension Research Council.