LIMRA Retirement Research surveyed defined contribution (DC) plan participants before and after they received information about their plans’ fees and expenses to determine how effective the disclosure statements were and how participants would react. Prior to receiving disclosure notices, 50% of participants said they did not know how much they paid in fees and expenses; the same portion did not know subsequent to receiving the notices.
Alison Salka, corporate vice president and director of LIMRA, noted that 22% of participants surveyed believed they did not pay fees and expenses after receiving disclosure notices, compared with 38% prior to disclosures going out.
The study found many participants overestimated the amount of fees and expenses they pay in their DC plans. Forty-two percent of participants believe they pay 10% or more—with more than one-quarter of participants believing they pay 25% or more in fees and expenses.
On average, DC plan fees and expenses range between 1% and 2%, depending on the size of the plan and the participants’ allocation choices, LIMRA noted. The survey found less than one in three participants who thought they knew how much they paid and estimated their fees and expenses to be less than 2%.Seven in 10 participants who said they knew they paid fees and expenses believed those fees and expenses to be reasonable, similar to what LIMRA found in its survey prior to the disclosure notices being sent.