The paper says the recent focus on fees has fostered a movement away from an asset-based approach for calculating administrative fees to a per-capita approach. Mercer contends that soon plan sponsors and participants will be questioning whether it makes sense for higher-balance retirement plan participants to pay more in fees than those with lower balances when it costs the same to administer large or small accounts.
It details examples of asset-based versus per-capita-based fee allocations, and suggests alternative allocation methods.
The report includes a list of steps plan fiduciaries can take to help ensure they are fulfilling their responsibilities to participants as well as minimizing their own fiduciary risk.A copy of “Fee Allocation: Trends and Strategy” can be downloaded from http://www.mercer.com/articles/1435350.
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