Press Release

FOR IMMEDIATE RELEASE

CONTACT:
Contact: Phyllis Surrett
703.516.9300
psurrett@asppa.org

ASPPA Supports Complete and Consistent Disclosure of 401(k) Fees

March 5, 2007 (Arlington, VA) – The House Committee on Education and Labor (Committee) is holding a hearing tomorrow on the disclosure of 401(k) fees titled “Are Hidden 401(k) Fees Undermining Retirement Security?” ASPPA applauds the Committee’s efforts to improve the transparency of 401(k) plan fee and expense information. Plan fiduciaries and participants need complete information to assess the reasonableness of fees charged for various plan services.

The 401(k) plan is America’s retirement plan. The 401(k), and its sister plans, 403(b) and 457, have been the most effective mechanism for getting American workers to save, particularly lower-income workers. In fact, lower-income workers are ten times more likely to save in one of these plans than on their own.

Because of the significant impact these plans have on the retirement security of tens of millions of American workers, Congress and the relevant regulatory agencies have imposed various rules on these plans intended to protect the interest of participants. These rules include special contribution limits, nondiscrimination tests and disclosure requirements. “As it examines these issues, Congress needs to remember that 401(k) plans are not free, due in part to the costs of complying with congressionally mandated ERISA requirements applicable to these plans,” according to Brian H. Graff, Esq., APM, Executive Director/CEO.

In addition, Congress needs to also remember that small businesses sponsoring 401(k) plans often bear higher fees than those of larger businesses due to start-up costs and the fact that fixed administrative costs are shared amongst fewer employees. The good news is that a competitive marketplace has given small businesses access to 401(k) plans at reasonable fees.

“Full transparency of all 401(k) plan fees is the most effective way to make sure plan costs are kept reasonable,” according to Graff. Any imposed disclosure requirements, however, must be consistently applied to all plan service providers regardless of the way plan services are delivered. For example, if disclosure is required of revenue sharing payments to plan service providers even though not directly paid from plan assets, such disclosures should be required whether the revenue sharing is paid to an unaffiliated party (“unbundled” arrangement) or an affiliated party (“bundled” arrangement).

While it is important for Congress to balance any new fee disclosure requirements against additional costs that may be incurred, it is imperative that 401(k) plan information be presented uniformly so as to not provide a competitive advantage for one segment of the industry over another. “Complete and consistent 401(k) plan fee disclosures will allow plan sponsors and participants to make an ‘apples to apples’ comparison of plan service costs,” according to Graff. Such disclosure allows for more complete information, which will enhance competition in an already crowded 401(k) marketplace, helping to reduce fees to the benefit of both plan sponsors and participants. ASPPA’s comments can be found at www.asppa.org.

ASPPA, a national organization of more than 6,500 retirement plan professionals, is dedicated to the preservation and enhancement of the employer-sponsored retirement plan system. ASPPA is the only organization comprised exclusively of pension professionals that actively advocates for legislative and regulatory changes to expand and improve the employer-sponsored pension system. In addition, ASPPA offers an extensive credentialing program with a reputation for high-quality training that is thorough and specialized. ASPPA credentials are bestowed upon administrators, consultants, actuaries and other professionals associated with the retirement plan industry.