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Archived News Release--Caution:
information may be out of date.
For more information call: (202) 219-8211
Secretary of Labor Alexis M. Herman has asked the department's Pension
Welfare and Benefits Administration (PWBA) to conduct public hearings to find
out whether fees being charged for administering 401(k)plans are appropriate.
The Secretary's concern comes as a result of issues raised by
participant advocates, industry observers, media reports and the department's
Pension Advisory Council regarding the fees and expenses currently charged to
401(k) plans and participants.
"I have asked Olena Berg, assistant secretary of PWBA, to look into
investment management, administration and other fees charged to 401(k) plans
and participants," said Herman. "Armed with the facts, we will assess the
adequacy of information on plan fees and expenses provided to plan fiduciaries
and participants and decide what action, if any, is necessary to address
problems."
The hearings will give the department an opportunity to obtain
first-hand information about problems in the area and suggestions for possible
solutions. More specifically, they will allow the agency to hear public comment
on a broad range of issues on the topic, which includes:
- whether plan sponsors and employees understand the fees and expenses
they are charged;
- whether there is a need for more disclosure of fee information;
and
- whether there are sufficient protections in place to safeguard
against excessive fees.
The hearings are only one step in the department's examination of 401(k)
fees. The department also is undertaking research to review existing data and
current practices relating to what fees are paid by 401(k) plans. The secretary
also plans to issue a consumer guide booklet to help the public understand the
costs associated with plan investments.
The department also is initiating an enforcement project to ensure that
plan sponsors are fulfilling their fiduciary responsibilities to ensure that
retirement savings of workers are not eroding because of excessive or
undisclosed fees from 401(k) accounts.
In recent years, there has been tremendous growth in defined
contribution plans--especially 401(k) plans. Today, approximately 25 million
workers save for their retirement by investing approximately $1 trillion in
such plans, up from $550 billion 5 years ago, and $215 billion in 1987.
The hearings are scheduled for Wednesday, November 12, with a possible
second session on Thursday, November 13, from 10:00 a.m. to 5:00 p.m. Testimony
will be given by 16 witnesses, including investment providers, financial
management companies and 401(k) plan sponsors. The hearings will be held at the
Labor Department in Room S-4215, A - C, 200 Constitution Avenue, N.W.,
Washington, D.C.
Archived News Release--Caution:
information may be out of date.
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