Retirement Plan Fee Disclosure Reviewed
The Ways and Means Committee held its first hearing on fee disclosure on Tuesday, Oct. 30, 2007. Although there have been other hearings to date on fee disclosure, this is the first hearing in the committee that has jurisdiction over governmental 457 plans and the most extensive with a total of 15 witnesses.
The fee disclosure debate is still in the early stages and beyond Committee Chairman Charles Rangel (D-NY) expressing an interest in working on the issue in a bipartisan manner, he didn't make a statement about likely next steps. Most observers believe that the Ways and Means Committee will wait until Chairman Miller, Education & Labor Committee, takes action on his bill before proceeding.
Three themes
Three themes emerged in the testimony:
- Regulatory agencies believe they have the existing authority to address the fee disclosure issue without legislation. Currently there are projects at DOL and SEC that address various aspects of the disclosure issue.
- Government and industry witnesses and committee members through their statements seemed to agree that Plan level disclosures needed to be more detailed and in-depth because of the inherent fiduciary responsibility, and that plan participants need clear, simple information on the fees they are paying on their retirement account investments.
- The way products are provided to plan sponsors can make a difference in how fees are disclosed but there was no consensus on whether a gross fee or fund-by-fund fees should be disclosed. Bundled or unbundled fee reporting was the third major area.
Next Steps
The two House Committees that are considering fee legislation may push bills through their respective committees later this year and those bills could be considered by the full House but it is too early to predict if that will happen. Any fee transparency regulatory guidance from DOL could slow the likelihood that legislation would pass this year.