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NEPC reports DC plan fees on the decline

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Fueled by recent litigation and new rules aimed at making fees more transparent, define contribution plan fees dipped to a record low this year, according to a 2013 survey from NEPC LLC.

The report shows the annual median total plan costs for plan sponsors was 0.53 percent or 53 cents for every $100 in fund assets, compared to 0.55 percent in 2012.

The report adds that the annual weighted average expense ratio was 0.52 percent or 52 cents for every $100 in find assets. This is unchanged from the 2012 survey, the report notes. The annual median recordkeeping fee was $80 for each plan participant, compared to $92 in 2012.

During the same period, the Standard & Poor’s 500 Index gained 3 percent.

“This is a continuation of a trend that began last year, where assets have grown, yet fees have fallen on the heels of legislative changes and fear of potential litigation,” the report states. “The increased attention to these fees by plan sponsors, their advisors and record-keepers themselves has also helped fuel this downward trend.”

The report adds recordkeeping fees saw a sharper fall (13 percent) than the overall expense ratio (unchanged), of which they are often a component.

In 2006, when NEPC first conducted the survey, recordkeeping fees totaled $110 per year for each plan participant. At the time, the median weighted average expense ratio stood at 0.57 percent.

The report observes that, on average, 61 percent of plan options have some form of revenue-sharing. Many plans, however, still offer no revenue sharing: 13 percent of plans, the report notes, fall into this category.

“Not surprisingly, most [of the nonrevenue-sharing plans] were on the larger end of the asset spectrum,” the report states. “The majority of the plan in the survey with over $2.5 billion in assets had zero plan funds with revenue-sharing.”