Data and Research

DC Plan Fees at Record Low

Defined contribution (DC) plan fees hit a record low this year, according to a survey by NEPC LLC.

By Rebecca Moore editors@strategic-i.com | December 05, 2012

NEPC’s Defined Contribution Practice group’s annual Plan and Fee Survey found total plan fees are the lowest they have been in the seven years NEPC has conducted the survey. Recordkeeping costs, the second largest component of total fees, saw the sharpest fall.  

Recordkeeping fees have fallen 22% since 2006, with half of the decline in recordkeeping fees occurring in the last 15 months alone. Four-of-five of the most prevalent recordkeepers in the survey have changed the way they approach fees, and vendor searches in 2011 resulted in savings, on average, of 40% on recordkeeping fees.   

The annual median total plan cost for plan sponsors was 0.55%, or 55 cents for every $100 in fund assets, compared to 0.58% in 2011. The annual weighted average expense ratio was 0.52%, or 52 cents for every $100 in fund assets, compared with 0.53% in 2011. The annual median recordkeeping fee was $92 for each plan participant, compared with $103 in 2011.   

In 2006, when NEPC first conducted the survey, recordkeeping fees totaled $118 per year for each plan participant. At the time, the median weighted average expense ratio was 0.57%.   

The 2012 Survey includes data from 99 plan sponsors and potential clients, representing approximately one million participants. It is based on numerical data calculated from data gathered from recordkeepers, custodians and trustees.   

A report about the survey is here.