Market Overview

Foundation Resolution Corporation Seeks to Recover Pension Plan Losses in Federal Court


FRC Files Multi-Million Dollar Breach of Fiduciary Action Against AON

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

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.

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