The tool is designed to allow plan participants to contribute equally to the operational cost of a workplace retirement plan, according to a statement from the firm.
To equalize plan fees, VALIC calculates the cost of administrative expenses for all plan participants. The firm then determines each plan participant’s percentage of payment towards these expenses, based on the amount of revenue provided by fund companies to cover the cost of administration.
Participants whose funds have covered more than their share of administrative costs will be issued a credit to their account, while participants whose funds have not generated their share of costs will be debited.
“Plan fee equalization ensures that all plan participants bear equal responsibility for their plan’s administrative costs regardless of their investment choices,” says Glenn Harris, executive vice president of VALIC.
Harris adds that VALIC hopes the new tool will increase fee transparency and enhance customer service for the plans it supports.
VALIC manages plans for nearly 25,000 groups serving more than two million plan participants. VALIC represents The Variable Annuity Life Insurance Company and its subsidiaries, VALIC Financial Advisors, Inc. and VALIC Retirement Services Company.