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WASHINGTON, DC -- U.S. Rep. George Miller (D-CA) introduced legislation today to ensure that American workers have clear and complete information about fees that could be cutting deeply into their 401(k)-style retirement savings.
The legislation, the 401(k) Fair Disclosure for Retirement Security Act of 2007, also requires 401(k) plan service providers to clearly disclose all potential conflicts of interest, so that workers and employers can determine for themselves whether service providers are acting in the best interests of plan beneficiaries.
“Hidden fees are eating into the retirement savings of millions of American workers without them knowing it," said Miller, the chairman of the House Education and Labor Committee. “Workers and employers need better information about fees in order to make well-informed decisions about basic things like which plans and investment options will give them the best deal."
Miller said the issue is particularly important given that increasing numbers of American workers are relying on 401(k)s to help them pay for a decent retirement. Nearly 50 million Americans now have a 401(k)-style plan. Past surveys have shown that 80 percent of workers don’t know how much they are paying in fees on their retirement savings accounts.
According to the Government Accountability Office, even a seemingly small difference in the fees that workers pay can make an enormous difference in the overall size of their 401(k) account balance. A 1 percentage point difference in fees can reduce retirement benefits by nearly 20 percent.
Miller’s legislation would:
- Require plan administrators to disclose, in clear and simple terms, all fees charged to plan participants each year;
- Help workers better understand their investment options by providing more detailed information on investment strategies, risks, and returns when they sign up for their company’s 401(k);
- Require 401(k)-style plans to include at least one lower-cost, balanced index fund in its investment line-up;
- Ensure that all fees and conflicts of interest are disclosed annually to employers who sponsor 401(k) plans; and
- Enhance the Department of Labor’s oversight of 401(k) plans.
In March, the Education and Labor Committee held a hearing on the subject of hidden fees. For more information on the hearing, please click here.
For more information on the 401(k) Fair Disclosure for Retirement Security Act of 2007 click here.
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FOR IMMEDIATE RELEASE
Contact: Tom Kiley / Rachel Racusen
2181 Rayburn House Office Building
Washington, DC 20515
202-226-0853
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