New York officials are hoping an agreement they have hammered out with a large insurer will establish a model for retirement program fee disclosures.
Lawyers in the office of New York Attorney General Eliot Spitzer negotiated the settlement agreement with ING Life Insurance and Annuity Company, Atlanta, a unit of ING Groep N.V., Amsterdam, to resolve an investigation into complaints about past retirement plan fee disclosure practices.
ING is neither admitting nor denying Spitzer’s allegations, but the company has agreed to pay $30 million in disgorgement and restitution to 66,000 members of the New York State United Teachers union and $3 million in restitution to 5,000 state workers in New Hampshire.
ING also has agreed to include comprehensive, one-page retirement plan cost disclosures with every solicitation or account opening package for ING products aimed at 401(k), 403(b), 403(b)(7) and 457 retirement plans.
A sample disclosure included as an exhibit with the settlement agreement starts out by warning the consumer, “This retirement plan is not free.”
“ING and the funds offered in the product charge various fees and expenses,” the disclosure states. “Many fund companies pay ING in return for being offered as investment options, as well as for the recordkeeping and related services ING provides. Funds are selected based on the revenue they pay to ING and on ING’s assessment of their quality and cost.”
In the second paragraph, ING will estimate what percentage of the average account balance goes to pay fees each year.