Sen. Herb Kohl, D-Wis., said he intends to introduce legislation designed to increase transparency of 401(k) fees at a hearing of the Senate Special Committee on Aging examining the issue.
Kohl said he would introduce the legislation, known as the Defined Contribution Fee Disclosure Act, along with Sen. Tom Harkin, D-Iowa. “Our bill will help shed some light on these fees by requiring complete transparency to both employers and participants,” he said. “This will allow employers to be able to negotiate with pension fund managers in order to get the lowest possible fees for their employees.”
The fees involved with 401(k) plans are an important issue, noted the panel’s ranking member, Sen. Gordon Smith, R-Ore., because of their potential effects on an employees retirement savings. “However, it is important that we don’t overwhelm” employees, he added. “These disclosures need to be concise, meaningful and readily understandable. If we bombard participants with too much information, they’ll do what most people would do–ignore it. And since any new disclosure requirements will carry costs for participants, overloading them helps no one.”