In its first report on retirement plan investment fees, The Pew Charitable Trust says it found nearly seven in 10 survey respondents in employer-sponsored retirement plans said they were at least somewhat familiar with their plan’s fees, while 31% were not at all familiar with the fees.

Roughly two-thirds had not read any investment fee disclosure in the previous year. Even among those who said they were very familiar with their fees, 33% hadn’t read any fee disclosures in the past year. During a media briefing, John Scott, director, Retirement Savings Project at The Pew Charitable Trusts, said this was the most surprising finding of the research. “It raises the question of what the word ‘familiar’ means to respondents. Maybe they are just familiar with how fees over time affect retirement savings. I suppose they can be familiar without reading disclosures, but we believe people are overstating their knowledge,” he said.

Of the one-third who had read a fee disclosure, nearly seven in 10 said they found the information understandable, but only 25% of all respondents said they had read and understood a disclosure about retirement account fees. Roughly four in five participants said it would be at least somewhat useful to have additional information about investment fees. Scott said this suggests that although many participants say they are familiar with retirement plan fees, they understand the limits of their knowledge and could use more information.

Asked what plan sponsors and advisers can do to help retirement plan participants better understand plan fees, Scott suggested that just raising the issue of plan fees helps participants. “I hesitate to give advice based on our research, but plan sponsors are required by law to provide disclosures, and they can use this opportunity to discuss fees with participants and let participants ask questions,” he said. “There are a number of ways employer might help employees, but the key is to seek opportunities to motivate them to raise their awareness of fees and pay attention to disclosures.”

Pew’s research found Hispanics, women, younger workers, respondents with lower levels of education, and low-income workers were among the least likely to be familiar with the fees in their plans. Pew’s report notes that on average, workers in these groups are less likely than other workers to be financially literate or to have experience with the financial system.

Scott said the reason women have less familiarity with fees can be explored further. He speculates that since women have less opportunity to participate in plans, they may be less familiar with investing, but he also speculates that men might be overstating their knowledge. “We can’t tell by our research,” he told the media. Scott also noted that younger workers would benefit most from more familiarity with plan fees since they have a longer time horizon for saving and investing.

The research also found that participants who had engaged in retirement planning at some point were more likely than those who had not to be familiar with their retirement plan fees. In addition, those who were more confident about investing were more likely to say that it would be helpful to have more information about fees.

Scott noted that Pew’s survey only covered employees at small and mid-size companies, which are not always given the full range of services a large plan sponsor would get from service providers. Small and mid-size companies also don’t always have the same size of benefits or human resources staff as large companies that could answer questions. “So, it’s possible we could see more familiarity with plan fees at larger companies, but at the same time, this is a difficult concept for employees at any size employer, so we probably would find unfamiliarity among many workers at large employers,” he concluded.

The Issue Brief, “Many Workers Have Limited Understanding of Retirement Plan Fees,” may be downloaded from http://www.pewtrusts.org/en/projects/retirement-savings.