The themes presented in the testimony were threaded together by a few unifying points: 401(k) fees need some clarification and regulation, but Miller’s proposal would impart too heavy a burden on plan sponsors and plan providers without a significant enough gain for participants.
The testimony by industry representatives echoed the same cautionary tone heard after Representative George Miller, (D-California), released the proposal in July (See Fee Disclosure Legislation Introduced in House). Miller is the committee’s Chairman.
Some of the groups presenting testimony asked that Congress work closely with the Department of Labor, which is already following a phased approach to fee disclosure (See DoL Asks For Advice on 401(k) Fee Disclosures).
“The requirements of H.R. 3185 for participant fee disclosure are numerous, burdensome, complex, and likely to increase participant confusion rather than enhance participant knowledge,” said Lew Minsky, an attorney testifying on behalf of the ERISA Industry Committee, the U.S. Chamber of Commerce, the Profit Sharing/401(k) Council of America and other organizations.
The American Benefits Council said in a statementthat although fee disclosure can help participants better understand their options, “participants need clear, simply short disclosures that effectively communicate the key points that they need to know to decide whether to participate and, if so, how to invest.” The group further said that “plan fiduciaries need more detailed information since it is their duty to understand fully the options available and to make prudent choices on behalf of all of their participants.”
According to the committee, Miller’s proposal would:
*require plan administrators to disclose, in clear and simple terms, all fees charged to plan participants each year;
*help workers better understand their investment options by providing more detailed information on investment strategies, risks, and returns when they sign up for their company’s 401(k);
*ensure that all fees and conflicts of interest are disclosed annually to employers who sponsor 401(k) plans; and
*enhance the Department of Labor’s oversight of 401(k) plans.
Thursday’s testimony from Bradford Campbell, Assistant Secretary of Labor and head of the Employee Benefits Security Administration (EBSA), is here.
A statement by Tommy Thomasson on behalf of The American Society of Pension Professionals & Actuaries (ASPPA) is here.