Opinion ID: 778983
Heading Depth: 3
Heading Rank: 3

Heading: Hancock's Collection of the 1% Risk Charge

Text: 63 Hancock next argues that its collection of a 1% risk charge on the net investment income allocated to the Plan did not breach its fiduciary duties. We again agree with Hancock. 64 The district court found that Hancock's collection of its agreed-upon compensation under the Contract was a breach of its fiduciary duties, stating that Hancock did not actually face any risk with respect to the free funds during this time period ... because it was `sufficiently protected' by other provisions of [the Contract] so that it was not at `material risk.' Therefore, the excess risk charges collected by Hancock during this time period constituted overcompensation. Judgment Opinion, 122 F.Supp.2d at 452 (citation to the record omitted). We disagree with this determination. 65 The 1% risk charge was Hancock's direct compensation under the Contract. Surely, Hancock was entitled to charge Sperry a fee for its administration of the Plan. As with all the provisions of the Contract, the parties negotiated at arm's length the terms of Hancock's compensation and agreed on a fee of 1% of the net investment income. Again, the changed economic climate may have rendered Hancock's compensation more lucrative than what the parties expected at the time of contracting. Nonetheless, there is nothing inherently inconsistent with the Contract's compensation provision and ERISA's fiduciary duty obligations. As we have held, a person is not an ERISA fiduciary with respect to the terms of the agreement for his compensation. Krear, 810 F.2d at 1259. 66 Thus, we reverse the district court's ruling that Hancock breached its fiduciary duties by collecting the 1% risk charge. 67