Most employers say they know how much their workers are paying in 401(k) fees. A telephone survey of 596 business executives who make decisions about employee benefits at for-profit companies released today by the Transamerica Center for Retirement Studies and Harris Interactive found that 92 percent say they have a clear understanding of the 401(k) fees charged. Most of the executives (73 percent) say that other employees also have knowledge about the 401(k) fees charged. But that doesn’t appear to be true. Transamerica also commissioned an online survey of 3,466 for-profit workers, and only 29 percent of the employees participating in a 401(k) said they are aware of the fees they are paying. Some 48 percent of the employees said they were unaware of the fees levied on their nest eggs and 23 percent were not sure what they were charged in fees.
“401(k) plan sponsors are overestimating workers’ awareness of 401(k) fees, thereby suggesting that workers are currently receiving fee-related information in an ineffective manner,” says Catherine Collinson, president of the Transamerica Center for Retirement Studies. Workers who say they are aware of 401(k) fees typically found out about them via the plan provider’s website (55 percent), printed materials mailed to their home (40 percent), or on paper (34 percent) or electronic (33 percent) quarterly account statements. The 401(k) participants generally expressed a preference for accessing fee information online (75 percent), such as on the provider’s website or in an electronic quarterly account statement.
Most of the 401(k) account holders said they would prefer a summary of the fees they were paying (54 percent). The rest would like a highly detailed account of fees and expenses (31 percent) or have no preference (14 percent). (The total does not add to 100 due to rounding.) The 401(k) fee disclosure bill currently being considered by the House would require that all fees be disclosed in one number on a 401(k) participant’s quarterly statement and before signing up for the plan. Financial service firms would also be required to provide more detailed fee information to employers, which would be available to workers upon request. A similar proposal has also been introduced in the Senate.
Tell us, how would you like to receive 401(k) fee information?