Fully half of defined contribution participants still do not know how much they pay in fees and expenses, even after the implementation of new fee-disclosure regulations last year, according to a new survey from Limra. Prior to the disclosure notices, 50% of participants in a survey did not know how much they paid in fees and expenses; the same percentage still does not know.
There was some improvement elsewhere, however. The number of people who incorrectly thought they were not paying fees at all decreased, Alison Salka, corporate vice president and director of Limra Retirement Research, said in a press release. The disclosure noticesor the discussion of themdid seem to improve the knowledge of those who believed they didnt pay any fees or expenses. There are nearly 75 million workers who participate in defined contribution plans in the United States. Our study found the 22 percent of participants believed they did pay fees and expenses after receiving disclosure notices, compared with the 38 percent in our first survey, prior to the disclosures going out, she said in the release.
On the other side of the spectrum, the study also found that some participants overestimate the amount of fees and expense they pay in their DC plans. Forty two percent of participants believe they pay 10% or morewith a quarter of them saying they think they pay 25%. On average, DC plan fees and expenses range between 1% and 2%, according to Limra.
There was much speculation on how consumers would react to the disclosure notices, yet our consumer surveys and discussions with plan service providers indicate that there has been limited reaction to learning about their fees and expenses, said Salka.