The majority of employees enrolled in retirement plans are not fully aware of the fees that go with their participation, a concern since new regulations governing fee disclosure take effect this month.
Plan sponsors must provide disclosures to participants by the end of August or face the consequences of failing to maintain HR compliance. Given that a recent survey found more than 60 percent of participants do not understand their own fees, however, simply disseminating the required information may not be enough. Further educational efforts might be needed to help bring employees up to speed on the matter.
The lack of understanding could cause some workers to react strongly when they receive their first disclosure statement. Despite the fact that the fees themselves are not necessarily changed and employees have been paying them since enrollment, past research has found that some were unaware of the facts, even believing that they did not pay some fees when that was not the case.
There is also some concern among experts that the new fee information could assume disproportionate importance in the minds of participants, at least in the short-term, causing them to weight their investment decisions for the wrong reasons and make poor decisions.
