IN BRIEF

The U.S. House Committee on Education and Labor recently held hearings on the disclosure of 401(k) fees, titled “Are Hidden 401(k) Fees Undermining Retirement Security?” Several professional organizations weighed in on the matter, expressing their general support and cooperation.

“The Investment Company Institute has advocated clear, effective disclosure for retirement plans for 30 years,” says Paul Schott Stevens, president and CEO of the ICI, which represents many players in the mutual-fund industry. “Participants need clear, concise information on fees, performance, risks, the investment adviser, and investment objectives, in a form that’s easy to understand, for all investment options in their plan. Additional information can be made available, for example via the Internet.

“Plan sponsors need to understand all service relationships and fee arrangements that affect their ability to carry out their fiduciary duties,” explains Schott Stevens. “We are actively working with the Department of Labor to improve disclosure on both levels.

“We have long urged the department to adopt the same disclosure principles, for participants and for sponsors, across the whole array of 401(k) products. Mutual funds that hold 401(k) assets provide participants frequent, clear reports on fees and performance.

“Half of all 401(k) assets are in mutual funds. Our research on mutual fund fees, conducted over the last decade, shows that fees and expenses have fallen over time. Employers and investors tend to seek out lower-cost funds, both in 401(k) plans and outside plans.”

The American Society of Pension Professionals & Actuaries says it applauds the committee’s efforts to improve the transparency of 401(k) plan fee and expense information. “As it examines these issues, Congress needs to remember that 401(k) plans are not free, due in part to the costs of complying with congressionally mandated ERISA requirements applicable to these plans,” according to Brian H. Graff, ASPPA’s executive director and CEO.