Nearly two-thirds of the respondents to a recent PLANSPONSOR NewsDash survey said that participants need more fee disclosure.
Notwithstanding those sentiments, we clearly are entering a period when plan sponsors doubtless will gain ground in their attempts to better discern the fees paid—and it seems reasonable to expect that at least some of that will trickle through to participants.
Of course, ensuring that the services received by your retirement plan and the fees paid for them are reasonable is a key fiduciary tenet under the Employee Retirement Income Security Act (ERISA). On its Web site, the Department of Labor's Employee Benefits Security Administration (EBSA) notes: "Understanding and evaluating plan fees and expenses associated with plan investments, investment options, and services are an important part of a fiduciary's responsibility."
Aside from your fiduciary responsibilities to monitor those services and expenses, recent trends have shifted more of the costs of retirement plan administration to the individual plan participants, either via some form of revenue-sharing arrangement or, in some cases, through an explicit charge posted to the individual account. Regardless, these fees have a direct impact on retirement plan accumulations and are of growing interest to the plan participants who rely on those savings.
Unfortunately, since those expenses frequently are netted against investment returns, participants may well be under the impression that those services are "free." This month's KnowHow is designed to help participants research just how much their retirement plans cost.
Unlike investment returns or market trends, which can be notoriously difficult to anticipate or even track, these expenses are relatively static (the amounts may fluctuate with the size of the underlying balance, of course)—and can have an enormous impact. As always, we look forward to your feedback. —Nevin E. Adams, JD