Before It's Too Late: A Retirement Security Newsletter from Phyllis Borzi - February 4, 2013

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Employee Benefits Security Administration
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February 4, 2013


Assistant Secretary Phyllis C. Borzi

Before It's Too Late: A Retirement Security Update From Assistant Secretary Phyllis C. Borzi

Hello! I'm Phyllis Borzi, Assistant Secretary for the Employee Benefits Security Administration at the U.S. Department of Labor.

I'm very proud of the 401(k) fee disclosure rules that went in to effect at the end of last year. So many people, including plan sponsors, simply are not aware that they are paying any fees at all. The disclosure rules are an important part of my twin goals of increasing transparency and giving people more tools and information so they can make better decisions. In particular, the rules will help small employers who have little leverage in this market, to look at the range of choices that they are able to offer and try to create a platform of lower cost, better performing investment options for their employees.

Some people have asked me to assess the success of these disclosures, but since they have only been in effect for many participants for barely a month, it is clearly too soon to tell. It will take some time for both plan sponsors and participants to fully understand and then to use the information. In some cases, this is the first type of disclosure they have received and part of the work of the Employee Benefits Security Administration has been to develop tools and resources so people can better understand and make choices about the information they are receiving.

One success I can point to right now is the effect on fees in the marketplace. Even before the disclosure rules went in to effect, fees started to come down in anticipation of having to disclose them. We want people to get value. We want those employers who are making the effort to provide this benefit for their employees to get the best value possible, and of course, we want to protect employees' hard-earned retirement savings from being diminished by excessive fees.

We are also very excited that private sector innovators are moving forward to design apps and websites that will allow employers and their employees to see how fees affect their returns and how the fee disclosure information can be used to compare the fees they are paying with fee practices of other plans. These user-friendly tools will help maximize the usage and utility of the fee disclosures.

Of course, we are closely monitoring the implementation of the fee disclosure rules and will make adjustments as needed, just as we will continue our efforts to educate plan sponsors and participants about the information they are receiving. These rules took years to finalize and their full impact cannot be assessed after just a few months.

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Save the Date for Small Employer Webcasts

America Saves week is February 25 — March 2, 2013 and provides an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status.

The Employee Benefits Security Administration will be hosting two webcasts during America Saves Week. The first is for small employers who do not yet offer a retirement plan. This will be sponsored in coordination with the Small Business Administration and Consumer Federation of America and will discuss the benefits to employers as well as employees and will provide information about the many retirement plan options available. That will be held February 27th from 2—4 pm, Eastern.

The second webcast will also be for small employers and will focus on using the new retirement plan fee disclosures to select and monitor your retirement plan’s service providers. That will be broadcast on February 28th from 2—3 pm Eastern.

Registration links and more information will be in the next edition of Before It's Too Late.


Getting the Word Out about 401(k) Fee Disclosures

Many organizations and personal finance writers are helping get the word out to 401(k) participants about the usefulness of looking at their fee disclosures. There are links to a couple of articles below but there are many others out there. Between these pieces and the Employee Benefits Security Administration web page with resources and the archived webcast, we hope people are reviewing and using this information to make informed decisions about their retirement savings.

As I say all the time when I describe this initiative: the most important thing you can do as a consumer is to open the envelope and review your fee disclosure chart or click on the link if you've elected to receive your information electronically.

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