A bill that would increase disclosures about 401(k) retirement plans should be put on hold, according to the American Benefits Council, until the Department of Labor finishes its disclosure proposals.
This morning, House Education and Labor Committee Chairman George Miller, D-Calif., announced he is introducing today the “401(k) Fair Disclosure for Retirement Security Act of 2007.”
The bill would require plan administrators to disclose all fees charged to plan participants each year; more detailed information on investment strategies, risks and returns when participants sign up for 401(k)s; as well as information on conflicts of interest and fees to employers who sponsor the plans.
In addition, 401(k)s would have to include at least one lower-cost balanced
index fund, and the Department of Labor would be given greater oversight over the plans.
“Hidden fees are eating into the retirement savings of millions of American workers without them knowing it,” Mr. Miller said in a press release.
The nearly 50 million workers in the plans and their employers need better information to make better investment choices, he said.
But employers who sponsor the plans are concerned that information disclosed to participants be kept simple, and want the importance of fees kept in proper context so workers don’t choose investments based solely on low fees, the American Benefits Council in Washington said at a press briefing this morning.
The Department of Labor had asked for input on how to better deliver information on administrative and investment fees to 401(k) plan participants. The comment period closed on Tuesday.
“It would be our strong preference to let the DOL finish their work,” said Lynn Dudley, vice president of retirement policy at ABC.
“Also the market place needs time to absorb some of the changes, too, that were made by [the Pension Protection Act of 2006],” which include automatic enrollment, automatic escalation of salary deferrals, and automatic investment into default investment options by workers who do not specify their choices, Ms. Dudley said.
