Terry Savage

Each fund is also required to have a website link on the chart, so you can check further into the plan's objectives, goals and portfolio turnover. You can also learn more about the fund managers.

Clearly, having all this information disclosed will help plan participants make smarter choices -- if you are willing to take the time to look into these facts. While past performance doesn't guarantee future results, it is helpful to see how the funds have performed over time, how they compare to their benchmark indexes -- and how much you are paying to get this performance!

The fatal flaw

But while this latest educational missive from the Labor Department is a welcome and useful tool, there is one thing it does NOT do. It does not give employees any power or leverage to force the employer to switch to another, lower cost plan provider -- or to include lower cost funds.

And that's the huge issue still hovering over the 40l(k) industry. Employees have no control over the plan being offered or the investment choices within the plan. Even worse, they are stuck with the administrative costs of the plan and management costs of the individual fund choices within the plan.

Many small companies offer 40l(k) plans that are administered by insurance companies. Typically their overall fees are higher, and the management fees charged by the funds they include may be way above average compared to those managed by fund companies like Fidelity, Vanguard, and T. Rowe Price.

By the way, what is "average" for plan costs? The Department of Labor said it is requiring disclosure of these costs, but it is not collecting the information from plan providers.

Therefore, there is no "benchmark" for 40l(k) fees and disclosures. The only way you could compare is to check with friends who work at other companies, asking about their level of fees. (Larger public companies typically have the lowest cost plans.)

If you notice that your retirement plan costs are hefty, what can you do? Heading straight to the HR department to complain is NOT recommended. With such little job security these days, troublemakers can find themselves out of a job. But you know that already.

That's where the Labor Department fell down on its job. It isn't publishing a database or benchmark of what most plans charge. Its website (www.dol.gov/ebsa) should collect and show that information.

And it should provide a page where anonymous complaints can be registered against companies that provide plans with above-average fees and charges.

If the DOL kept a database, they could easily check to see if the employee complaint is valid. And they could contact the employer, nicely "suggesting" that fees be reduced or changes be made in the plan offering.

The DOL's Employee Benefit Security Administration oversees 512,000 40l(k) plans. It should stop patting itself on the back for requiring the new disclosures until it can use them to actually pressure employers to set up fairly priced retirement plans for their workers. And that's The Savage Truth.


Terry Savage

Terry Savage is a nationally known expert on personal finance and a regular television commentator on CNN, CNBC, PBS, and NBC on issues related to investing and financial markets.

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