May 31, 2012
--- The American Society of Pension Professionals &
Actuaries (ASPPA) is challenging the assumptions behind a report about retirement
plan fees. ---
The research group Demos claimed in a report that a
two-earner household, in which each partner earns the median income for their
gender each year over their working lifetime, will pay an average of $154,794
in 401(k) fees and lost returns. A higher-income dual-earner household, in
which each partner earns an income greater than three-quarters of Americans
each year, can expect to pay an even steeper price: as much as $277,969. (See “Retirement
Plan Fees Consume 30% of Returns.”)
Brian H. Graff, chief executive and executive director of
the ASPPA, contends that Demos inflated those figures. He said the organization
estimated fees for mutual funds in 401(k)s at 200 basis points (2%) of plan
assets, a level he called ridiculous.
Graff also challenged Demos’ claim that the new disclosure
requirements from the Department of Labor (DOL) are not enough to ameliorate
high fees. He said that retirement service providers will have to lower their
fees because of increased competition once fee information goes public with the
new law.
Jay Polansky