Stephanie Napier, VP and Senior Trust Counsel at Marshall & Ilsley Trust Company, told a discussion group atPLANSPONSOR‘srecent Plan Designs conference in Chicago that, because of the inconsistent requirements, plan sponsors needed to know what their plans were paying. However, providers were not always inclined to keep them informed.
align=”center”> The Panel Audio File
Now, the Department of Labor is proposing greater fee transparency (See EBSA Finishes Regulatory Package with Participant Disclosure Proposal ). Mary Ann Langevin, DC Business Leader at Mercer, does not believe that full disclosure will be fully implemented in the near future, saying that many providers are just starting to think about all of their sources of revenue and have not yet moved toward revealing that information.
However, Douglas Prince, Managing Director at Stifel Nicolaus, believes that plan sponsors can update how they manage their plan fees as soon as this year.
Napier agreed, but said she hoped that sponsors would be allowed to implement the changes within their existing contracts, making the necessary adjustments without being forced to write up an entirely new agreement.
Considering the implications of these changes, Prince said that plan sponsors will have to learn to handle the new flood of information.
He recommended reviewing all relationships in case of potential conflicts of interest. Sponsors must think about whether fees are reasonable, whether they are cost-effective, and must know what services they are receiving from agencies.
Plan sponsors will have to offer notices to participants about the costs to get into a particular plan. They have to be able to reconcile that data and check it against their contracts.
While some plan sponsors may believe that their providers are reluctant to reconsider their fees and services, Langevin disagreed. Not only does she believe they are not at all unwilling, but also that, " [Plan sponsors] have a right to go back and renegotiate at any point."
Plan sponsors also will have to be prepared to answer questions from their participants; though their clients' main focus likely will be the amount of money they are spending, said Napier. Sponsors will need to know not only the total but also where the money goes and what individual services cost .
She worried that, because participants do not understand the details of the plan, sponsors will be required to explain it as well as possible and, thus, will face tough questions. Prince thought that past "nickel-and-diming" practices would resurface as disclosure reports become increasingly more detailed, but Langevin was optimistic.
As the process moves forward, both providers and participants will be more in control of their expenses. She did not foresee a level of excessive precision, like Prince, but said, "I think this is going to be an evolution."
« Bogus Hardship Withdrawals for Chrysler Workers Leads to Conviction