Whaddaya know? All this time, I thought it was just retirement plan participants who didn't understand the fees they were paying. Turns out, according to a recent Spectrem Group study, plan sponsors don't understand plan fees all that well either - only 45% of plan sponsors fully understand their retirement plan fees, according to the report that evaluated some 600 plan sponsors with assets under management of $10 million to $200 million.
I was surprised, and so was Spectrem director of retirement research Gerry O'Connor, who authored the report. "The numbers indicate that disclosure statements are not effective in creating an understanding of fees and that's their purpose," he said in Financial Advisor.
The study found that 28% of plan sponsors pay less than 0.5% in plan assets annually in fees, 53% say they pay between 0.5% and 1%, 13% pay more than 1% of plan assets, while 6% say they do not pay any fees at all.
"It's a possibility that plan sponsors don't understand the fee structure because of embedded fees within the plan, and they may be paying some additional charges that they are not aware of," O'Connor said.
Whatever the reason, plan sponsors have some time to bone up on their plan fees as well as the new disclosure rules that will govern them. New fee disclosure regulations, originally scheduled to become effective this month, have now been delayed until April 2012.
As always, I welcome your comments: Do you understand your plan fees? How do you think the new disclosure rules will most affect you and your plan participants? Email your thoughts to email@example.com.
This post originally appeared on EBN's blog, the Daily Diversion. Visit ebn.benefitnews.com/blog/daily_diversion to view other posts.
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