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April 23, 2009 at 08:00 PM
Representatives for big retirement services vendors and other organizations with an interest in 401(k) plans clashed Wednesday at a hearing on proposed plan fee disclosure rules.
Larry Goldbrum, general counsel at the SPARK Institute, Simsbury, Conn., a group that represents large retirement services providers, asked members of Congress to think about costs as well as benefits when writing new plan fee disclosure rules.
Otherwise, the effort to improve disclosure “will ultimately increase the cost” of offering a defined contribution retirement plan, Goldbrum said at the hearing, which was organized by the House Education and Labor Committee’s Health, Employment, Labor and Pensions Subcommittee.
Witnesses who supported efforts to require vendors to “break out” fees for “bundled” services,” rather than simply reporting the total, included Alison Borland, a retirement specialist in the Nashville, Tenn., office of Hewitt Associates L.L.C., and Julian Onorato, chief executive of ExpertPlan Inc., Windsor, N.J., who spoke for American Society of Pension Professionals, Arlington.
“Plan fiduciaries cannot fulfill their obligations without clear fee disclosures from service providers that break out fees for various services,” Borland said.
Hewitt has found that simply unbundling fees helped one employer cut plan costs to 0.16% of plan assets, from 0.30%, Borland said.
Separate disclosure of investment management and administration fees is especially important, Borland said.
Onorato, who also spoke for two ASPPA affiliates, the Council of Independent Recordkeepers and the National Association of Independent Retirement Plan Advisors, said the large vendors want to report a single fee for bundled services for competitive reasons.
“They want to be able to tell business owners that they can offer retirement services for free,” Onorato said. “Of course, there is no such thing as a free lunch, and there’s no such thing as a free 401(k) plan.”
Rep. Robert Andrews, D-N.J., the HELP subcommittee chairman, has cosponsored H.R. 1984, the 401(k) Fair Disclosure for Retirement Security Act of 2009, with Rep. George Miller, D-Calif., the chairman of the full committee.
