Consumer Agenda for Retirement Security

Initiative # 3: Improve retirement savings plans 

A. Require straightforward disclosure of all fees paid by 401(k) plan participants.

In today’s world of “do-it-yourself” retirement plans, working men and women must make decisions about whether to participate in a 401(k) plan and how to allocate their savings among the investment options offered by their plan.  In order to make the right decisions they need to receive understandable and adequate statements about the administrative and investment fees they are being charged, as well as information about the levels of risk and rate of return offered by each investment offered by the plan.  It is also essential that plan officials who choose the financial institutions and initial investment offerings have even more detailed information.  To these ends, it is imperative that administrative and investment fees be separately stated rather than bundled together.  The Department of Labor has proposed regulations on these topics, but they are inadequate and more worker-centered rules should be developed.  This can be done by either regulation or by legislation.1

The Department of Labor regulations, among other problems, allow disclosure to aggregate administrative and investment fees, which investment professionals reject as failing to provide necessary information.  The regulations also have additional problems, including a presentation format and vocabulary that will reduce accessibility for many plan participants.   Congressman George Miller has introduced the Fair Disclosure for Retirement Security Act (H.R. 3185), which would require unbundled disclosure of fees to participants in 401(k) plans.  Critical comments on the Department of Labor’s proposed regulations can be found at   http://www.dol.gov/ebsa/pdf/cmt-10170830-ex.pdf (Congressmen George Miller and Rob Andrews);  http://www.dol.gov/ebsa/pdf/cmt-10170822-ex.pdf (Pension Rights Center);  http://www.dol.gov/ebsa/pdf/cmt-10170820-ex.pdf (AFL-CIO);  http://www.dol.gov/ebsa/pdf/cmt-10170818-ex.pdf (AARP);  http://www.dol.gov/ebsa/pdf/cmt-10070818.pdf (Cornell University School of Law Legal Clinic); http://www.dol.gov/ebsa/pdf/cmt-10170810-ex.pdf (Consumer Federation of America).

Learn more about the other initiatives in the Consumer Agenda for Retirement Security.

Initiative 1: Promote a more adequate and secure private retirement income system.
Initiative 2: Empower workers to promote their own retirement security.
Initiative 3: Improve retirement savings plans.
Initiative 4: Improve traditional and hybrid pension plans.
Initiative 5: Make retirement plans fairer for workers and their spouses.

Print the Consumer Agenda for Retirement Security [PDF].