Ala. employees getting $16 million in settlement

AP News
Posted: Oct 27, 2010 5:52 PM
Ala. employees getting $16 million in settlement

State employees who relied on a deferred compensation plan from Nationwide Retirement Solutions will receive $16 million in a settlement of lawsuits over millions in fees that were paid to a lobbying group for state workers.

State Attorney General Troy King signed the settlement Wednesday after it was approved by the Alabama State Employees Association and the state Personnel Board, but judges still must approve the deal. The settlement will cover civil suits filed over the fees to the association and other issues.

More than 20,000 active and retired state employees who participated in Nationwide's plan between 2000 and 2009 will share in the settlement. The amount will depend on how much they had in the program.

The 20-page agreement, obtained by The Associated Press through an open records request, provides for Nationwide to pay $15.5 million and Aon, a consulting firm that advised the employees' association, to pay $500,000.

No one acknowledged any wrongdoing in settlement, and no attorneys' fees will come out of the $16 million for participants.

Everyone involved in negotiating the settlement praised it, with employees' association attorney Joe Espy calling it "an outstanding resolution" and Nationwide spokesman Jeff Whetzel saying it avoided the cost of prolonged litigation.

The attorney general said it is "righting a wrong that had been done to state employees."

Nationwide Retirement Solutions provided the deferred compensation plan to state workers for more than 30 years. The Personnel Board renewed the plan every few years at the recommendation of the Alabama State Employees Association.

The board dropped Nationwide in December after learning the Columbus, Ohio, company had paid the $11.8 million over several years to the employees' association in sponsorship fees and commissions and had provided trips to association officials. The termination and the payments led to lawsuits among the parties and program participants.

An investigation last year by the state Securities Commission found no criminal violation of securities law, but the commission said the employees' association should have disclosed the payments to the participants because the amount the participants earned on their accounts was reduced to cover about $6 million of the payments.

Personnel Board members and staff who participated in the deferred compensation program and helped develop the settlement said they would not take any of the money. Instead, their portion will be spread among the other participants.

"Having my share of the distribution going to other state employees assures them that I am acting in their best interests and not making a decision in which I would personally benefit," said Faye Nelson, who represents state workers on the board.

"Now we can move toward getting money back to the employees it was taken from," state Personnel Director Jackie Graham said Wednesday.

The state employees' deferred compensation plan is now run by Great-West Retirement Systems, which has 18,029 participants with $362 million invested as of September.