Members of the House Education and Labor Committee seem to have caught the attention of the U.S. Department of Labor.
The committee today held a hearing on defined contribution retirement plan fee disclosure practices.
Soon after the hearing ended, the Labor Department issued a statement saying, “Improving 401(k) fee disclosure is a top priority of the Labor Department.”
The Labor Department is working on “several regulatory initiatives” to improve the transparency of fee and expense information for participants and plan fiduciaries, Bradford Campbell, an acting assistant secretary at the department, says in the statement.
Campbell says the department is:
- Preparing a request for information seeking ideas about ways to improve the current disclosures for 401(k) plans and other participant-directed individual account plans.
- Completing a final rule on Form 5500 reporting of plan fee and expense information.
- Getting ready to publish a proposed regulation that would require retirement plan service providers to tell plan fiduciaries about the providers’ direct and indirect compensation, fees, and other financial arrangements.
Earlier today, at the House committee hearing, committee members, administration officials and pension management industry representatives agreed on need for improving retirement plan cost disclosure practices.
“The best approach to the fee issue is through simple, clear disclosures that enable plan sponsors and participants to understand and compare fees in the context of the services and benefits being offered under the plan,” said Robert Chambers, who appeared on behalf of the American Benefits Council, Washington.
Chambers and other witnesses noted that poorly thought out changes could backfire and make plans even more confusing and expensive to run.
But Rep. George Miller, D-Calif., chairman of the Health and Labor Committee, said, “Doing nothing is not an option.”
There is a “likelihood” that legislation dealing with the issue will be introduced, Miller said.
Frank Keating, president of the American Council of Life Insurers, Washington, said in a statement after the hearing that financial services companies, federal policymakers and plan sponsors should continue to talk about ways to make sure sponsors have the information they need to evaluate plan features.