The Department of Labor making swift improvements in regulations dealing with disclosure of the cost of managing 401(k) and other defined contribution accounts to plan members is the likely result of a hearing on the issue last week by the House Education and Labor Committee.
Within hours of the committee’s hearing, the DOL issued a statement saying that “improving 401(k) fee disclosure is a top priority of the Labor Department.”
Acting Assistant Secretary of LaborBradford P. Campbell, said in the statement that the DOL is currently working on “several regulatory initiatives” focused on improving the transparency of fee and expense information for participants and plan fiduciaries.
Specifically, he said, the agency will lay the foundation for a regulation later this year by publishing a request for information in The Federal Register “soon,” inviting suggestions from the public to improve the current disclosures applicable to participant-directed individual account plans.
Second, Campbell said, the agency is expanding the public disclosure of fee and expense information required in Form 5500 by acting “within the new few months” on a final rule based on proposed changes published for comment last July.
The proposed changes would require “significant improvements in transparency of plan-related fees and expenses,” he said. The proposed changes will make it easier for regulators and plan officials to ensure workers’ interests are protected, he said.
Campbell also said the DOL plans to publish a proposed regulation in the springrequiring service providers to disclose to plan fiduciaries information concerning the providers’ direct and indirect compensation, fees, and other financial arrangements.
“This will ensure fiduciaries have theinformation needed to assess both the reasonableness of the fees andpotential conflicts of interest,” he said.
Campbell’s comments clearly were a direct fallout from the hearing, where representatives of the pension management industry, government officials and members of the House Education and Labor Committee all acknowledged that improved disclosure of the cost of managing 401(k) and other defined contribution accounts is needed.
However, all of the experts and most members of the committee agreed that the devil is in the details, and voiced concern that any legislation or other action should be approached cautiously because of the potential to make the plans even more costly and the information more difficult for plan members to understand.
Rep. George Miller, D-Cal., the committee chairman, said during the hearing that “doing nothing is not an option,” and raised the “likelihood” that legislation dealing with the issue could be introduced.