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Now we're going to meet an attorney on a mission. He wants to stop companies from offering their employees high-cost bad retirement plans. Boeing has been one of his targets. And now the aerospace company is moving to settle a lawsuit accusing it of mishandling 401(k) plans for thousands of workers. NPR's Chris Arnold reports.
CHRIS ARNOLD, BYLINE: Under federal law, employers are required to act in their workers' best interests in retirement plans. It's not enforce very much by regulators, but a consumer rights lawyer in St. Louis named Jerry Schlichter has sued a series of companies now to force the issue. This is earnings Schlichter the nickname of the 401(k) Lone Ranger.
JERRY SCHLICHTER: Yes, that's what I have been called. And I've always represented workers, and I see how important it is that workers not be ripped off by their employer in their 401(k) plan.
ARNOLD: OK. Here's how this works. If a company does right by its workers, many experts say it finds low-cost, well-diversified, smart investment choices. But Schlichter says some companies offer workers mutual funds with fees that are way too high. Sometimes, he says, the companies get kickbacks for that, and over time...
SCHLICHTER: It's usually devastating. A 1 percent difference in fees over a 35-year work career makes a 28 percent difference in the retirement assets available to that worker. So this is huge. It may mean that the employee has to extend their work another six or seven years instead of retiring when they wanted to or their lifestyle in retirement is severely hurt.
ARNOLD: Schlichter and Boeing are note commenting on this case 'cause the details are still being worked out. Before the settlement, Boeing had said its retirement plan was in keeping with best practices. Schlichter's already sued Lockheed Martin, Ameriprise Financial and six other large firms that have settled for a total of $200 million. About a third of that goes to the law firm. Two-thirds go to the workers. Schlichter says the settlements also mandated reforms at the companies that are enforce by the federal courts. Now, all these cases involve big companies, but...
IAN AYRES: Smaller employers tend to have an even larger problem with excess fees.
ARNOLD: That's Ian Ayres, a professor at Yale Law School. He researcher 401(k) plans. He says a good rule of thumb - if you're paying less than half of 1 percent in fees total for your investments, you're doing well. But if you're paying more than 1 percent, you're losing a lot of money over time. Chris Arnold, NPR News.
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