Retirement plan participants invested in the Principal LifeTime Hybrid target date collective trusts since April 14, 2020 may be covered by a proposed class action alleging Principal affiliates filled those funds with their own higher-fee index funds. No class has been certified and there is nothing to file yet.
Allegations Only · No Settlement Yet
This article describes a class action complaint. The statements below are unproven allegations. The Principal defendants have not been found liable, there is no certified class, and nothing to claim at this time. This page is informational and is not legal advice.
What Is This About?
Two participants in the International Brotherhood of Electrical Workers District No. 9 Pension Plan, a union retirement plan for electrical workers in the Pacific Northwest, filed a proposed class action on April 14, 2026, against five Principal Financial Group companies. The case, East v. Principal Global Investors Trust Company, Case No. 3:26-cv-00738, is pending in the U.S. District Court for the District of Oregon, Portland Division.The complaint, brought under the Employee Retirement Income Security Act (ERISA), alleges that Principal’s trustee and adviser affiliates built the Principal LifeTime Hybrid target date collective investment trusts mostly out of Principal’s own index funds even though, the plaintiffs say, competing index funds tracking the same benchmarks cost less and tracked them more closely. A second set of claims says Principal Life Insurance Company charged the IBEW plan more than a reasonable recordkeeping fee. None of this has been proven, and Principal has not been found liable.
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What the Complaint Alleges
The Principal LifeTime Hybrid funds, launched in 2009, are target date funds offered as collective investment trusts — pooled vehicles run by a bank or trust company and sold only to retirement plans. Each fund is a “fund of funds”: it holds other investments, and investors bear the fees of those underlying holdings on top of the trust’s own fees.The plaintiffs say they do not challenge the use of index funds or the benchmarks chosen. Their complaint targets which index funds were picked. According to the complaint:
- Four index-fund sleeves — tracking the S&P 500, the Bloomberg U.S. Aggregate Bond Index, the S&P MidCap 400 and the S&P SmallCap 600 — made up 60 to 70 percent of each fund’s assets, and more than $2 billion in total.
- Principal used its own proprietary index funds for those sleeves even though they charged more than outside index funds tracking the same indices, deviated further from their benchmarks, and trailed competitors even before fees.
- No major target date manager other than Principal used Principal’s index funds inside its own target date series during the period.
- For some actively managed Principal holdings, the defendants picked higher-cost vehicles or share classes when cheaper versions of the same investments were available to a fund of this size.
The complaint says these choices earned Principal and its affiliates additional management fees and helped build assets in Principal’s own index products, which the plaintiffs describe as disloyal and imprudent conduct and as prohibited transactions with parties in interest.
The Recordkeeping Fee Claims
Principal Life served as the IBEW District No. 9 plan’s recordkeeper. Citing the plan’s Form 5500 filings, the complaint says participants paid $48 a year plus 0.05% of their account balance, which it calculates at an effective $93.73 per participant for 2022 across roughly 24,900 participants. The plaintiffs contend a reasonable fee for a plan with more than $1 billion in assets would have been about $40 per participant, citing an industry fee survey and comparable plans. These are the plaintiffs’ calculations and have not been tested in court.Who Could Be Included?
The complaint proposes two classes:- Nationwide target date fund class: participants and beneficiaries of any 401(a)-qualified employee benefit plan invested in any Principal LifeTime Hybrid collective investment fund at any time on or after April 14, 2020, excluding governmental plans. The complaint says more than 7,000 plans had participants in these funds and estimates the class in the hundreds of thousands.
- IBEW recordkeeping class: all participants and beneficiaries of the IBEW District No. 9 Pension Plan at any time on or after April 14, 2020.
The defendants are Principal Global Investors Trust Company, Delaware Charter Guarantee & Trust Company (doing business as Principal Trust Company), Principal Global Investors, LLC, Principal Life Insurance Company and Principal Management Corporation.
What the Lawsuit Seeks
The plaintiffs ask the court to certify the classes, declare that the defendants breached their ERISA duties and engaged in prohibited transactions, and order them to restore plan losses and give up profits earned from the challenged conduct. They also seek equitable relief such as a surcharge or constructive trust, interest, and attorneys’ fees. The complaint does not state a total dollar figure.What Happens Next?
ERISA fee cases usually face an early motion to dismiss arguing that the plaintiffs’ comparisons to other funds or plans are not meaningful benchmarks. If the claims survive, the case moves to discovery and then class certification. Recoveries in ERISA cases brought on behalf of a plan generally flow to plan accounts rather than through individual claim forms, but that would be decided only if the case settles or the plaintiffs win.Questions
How can someone tell whether their retirement plan used the Principal LifeTime Hybrid funds?
The plan’s investment menu, quarterly statement or annual fee disclosure lists each fund by name. The funds at issue are the Principal LifeTime Hybrid collective investment trusts, which carry target years from 2015 through 2070 plus a Hybrid Income option. Principal mutual fund target date products are not the collective trusts named in the complaint.
Is the whole plan or each participant the one suing under ERISA?
ERISA section 502(a)(2) lets participants sue on behalf of the plan to recover plan losses, so any recovery generally goes to the affected plans and is then allocated to participant accounts. The plaintiffs here sue individually, on behalf of their plan and as proposed class representatives.
Do participants need to move money out of the Principal funds because of this lawsuit?
The lawsuit does not require anyone to do anything, and nothing needs to be filed to stay in a proposed class. Investment choices depend on each person’s situation; a plan fiduciary or a licensed financial professional can help with that decision.
What did Principal say about the lawsuit?
The complaint is the plaintiffs’ account only. Principal has not been found liable, and any response or motion to dismiss would be filed on the District of Oregon docket for Case No. 3:26-cv-00738.
Sources
- East v. Principal Global Investors Trust Company — Class Action Allegation Complaint, No. 3:26-cv-00738 (D. Or. Apr. 14, 2026)
- East v. Principal Global Investors Trust Company — RECAP docket archive
