By Robert Dixon
The U.S. Department of Labor announced a $5.2 million settlement agreement with ING Life Insurance and Annuity Co. (ILIAC) that will be paid to specific retirement plan clients of the company. The fine is a result of ILIAC’s previously undisclosed practice of keeping investment gains realized when it failed to process requested transactions in a timely manner, according to a Department of Labor statement.
Regulators said the amount represents gains received by ILIAC as a result of transaction processing errors between 2008 and 2011. Failing to disclose its policy on reconciling transaction processing errors to retirement plan clients resulted in ING receiving compensation in violation of the Employee Retirement Income Security Act, or ERISA, the government contends. In addition to repaying the gains, ILIAC agreed to pay a $524,500 fine.
The settlement will restore funds to about 1,400 retirement plans. ILIAC has approximately 35,000 ERISA-covered plan clients.
“It has been ILIAC’s practice to keep gains derived from processing transactions that it failed to timely process as of the contract date as well as from re-processing erroneous transactions. In both instances, ILIAC makes corrections using the date required by its contract. Gains and losses result when the share or unit value differs between the contract date and the actual trade date. Any gains in share or unit value between the contract date and trade date are kept by ILIAC, whereas ILIAC is obligated, by contract, to make plans whole for any losses,” according to DOL.
"Under terms of the agreement, ING Life Insurance and Annuity Company will continue applying its policy – which was communicated to sponsors during the 408(b)(2) fee disclosures in July 2012 and again recently as part of a sponsor mailing," ILIAC said in a separate statement.
“Failure of a plan fiduciary to disclose the revenue it received from managing retirement plans is a disservice to employers who are providing this benefit to their workers,” Assistant Secretary of Labor Phyllis C. Borzi said in a statement. The Employee Benefits Security Administration (EBSA) oversees retirement plans.
© Entire contents copyright 2013 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com. Contact [email protected]with any comments.