Headlines about "Ret plan investments - costs"
Gathered from the web by the editors at BenefitsLink.com.
[Guidance Overview] Avoiding Personal Liability for 401(k) and Retirement Plan Investments: From Fees to Losses (PDF)
6 pages. Excerpt: "Now is the time for ERISA risk management. Plan fiduciaries should engage in a deliberative process that demonstrates their attention to the 'money' issues involving plan investments ? from their selection, costs, and performance, to the credentials, terms, conditions, and costs associated with the professionals who recommend them. With this in mind, presented below are five general questions that all plan fiduciaries should be asking . . . and getting answered. They should drill deeper these days, which is why the Appendix [at http://blawweb.private.bloomberg.com/blaw/showDoc.pl?docId=91111944&summary=yes#APPENDIX#APPENDIX] lists the critical investment issues that plan fiduciaries should now be addressing with their advisors. ERISA demands careful attention to plan investments, and this is needed to protect plan fiduciaries from personal liability during these turbulent and unpredictable times." (Bloomberg Law Reports via Paul, Hastings, Janofsky & Walker LLP)
Bill with Retirement Plan Fee Disclosure, Investment Advice Rules Advances
Excerpt: "Specifically, the bill would require the following: Fees would have to be disclosed by 401(k) plans as a single figure in a worker's quarterly statement. Service providers and plan administrators would have to disclose fees to plan sponsors, broken into four categories: 1) administrative fees; 2) investment management fees; 3) transaction fees; and 4) other fees. Plan administrators would be obliged to provide investment information to participants, including information about risks, returns and investment goals." (Thompson Publishing Group)
New Research Reveals Drivers Impacting Retirement Plan Fees
Excerpt: "The Defined Contribution/401(k) Fee Study research report, conducted by Deloitte and sponsored by the Investment Company Institute (ICI), looks at total fees charged across a broad sample of defined contribution plans with a range of plan sizes, service levels, investment offerings, service providers, and fee structures. This study of 130 plans reveals that lower fees are closely related to a number of factors, including the size of the plan, higher contribution rates by employers and employees, and greater use of automatic enrollment." (Deloitte Development LLC)
Not All Retirement Plan Participants Pay Share of Revenue Sharing
Excerpt: "[O]ne problem with the current system has gotten little attention: Using investment fees to pay for other aspects of 401(k) expenses means investors in some high-cost funds, like actively managed funds, pay a much greater share of a retirement plan's fixed costs than investors in more basic options like company stock or an index fund. 'The concern is it's not equitable,' says Lori Lucas, leader of consulting firm Callan Associates Inc.'s defined-contribution practice. 'Some people could pay almost all of the costs. Some could pay none of the costs. What funds you select can determine whether you pay or not.' A recent Callan study found that only one in eight plans that used revenue sharing actually had their entire menu of funds contributing to the plan's upkeep. In about a third of plans, half the funds or fewer contributed." (The Wall Street Journal)
[Guidance Overview] 7th Circuit Panel Limits Ruling's 404(c) Effects
Excerpt: "Faced with pressure to take another look at its February 2009 decision in a widely watched 401(k) excessive fee case, a federal appellate court has turned down the rehearing request but issued an addendum sharply limiting the earlier ruling's scope on the issue of 404(c) protections. While the three judge panel at the 7th U.S. Circuit Court of Appeals refused to disturb the court's earlier holding in Hecker v. Deere & Co., Circuit Judges Daniel A. Manion, Diane P. Wood and John Daniel Tinder made clear the Hecker decision was not intended as a sweeping statement to be broadly applied to all similar fee disputes." (planadvisor)
[Guidance Overview] Circuit Court Denies Rehearing on Dismissal of ERISA Revenue Sharing/Excess Fee Complaint in Hecker v. Deere (PDF)
3 pages. Excerpt: "Earlier this year, the U.S. Court of Appeals for the Seventh Circuit affirmed the dismissal of claimed ERISA violations for alleged revenue sharing and excessive fees against a retirement plan sponsor and the mutual fund complex that provided investment options and trust and other services for the plan. Yesterday, the Seventh Circuit denied plaintiffs' petition for rehearing but issued a short opinion addressing certain issues raised by the U.S. Department of Labor (DOL) in an amicus brief and emphasizing that its ruling was based on the particular facts alleged in this case. Hecker v. Deere & Co., Nos. 07-3605 and 08-1224 (June 24, 2009)." (Sutherland)
House Committee Approves Bill That Restricts 401(k) Advice to Independent Advisers
Excerpt: "Today's bill merged two proposals that were introduced this year: one made by Rep. Rob Andrews, D-N.J., focused on conflicted investment advice, the other sponsored by the committee's chairman, Rep. George Miller, D-Calif., would have required increased disclosure of fees and expenses in 401(k) plans. The new bill incorporates a proposal to provide corporate plan sponsors with temporary relief from making required contributions to their traditional defined benefit pension plans." (Investment News; free registration required)
Legislation Calls for More Transparent Disclosures of 401(k) Fees
Excerpt: "Representatives George Miller (D-Calif.) and Rob Andrews (D-N.J.) reintroduced the 401(k) Fair Disclosure for Retirement Security Act (H.R. 1984). Senators Herb Kohl (D-Wis.) and Tom Harkin (D-Iowa) reintroduced the Defined Contribution Fee Disclosure Act (S. 401). And on June 10, Representative Richard Neal (D-Mass.) introduced a modified version of the Defined Contribution Plan Fee Transparency Act (H.R. 2779). . . . All three bills would impose new reporting and disclosure requirements for individual account balance plans, including new disclosures from service providers to plan sponsors and from sponsors to plan participants and beneficiaries. [The chart in the target document] summarizes some key provisions with significant implications for employers." (Watson Wyatt Worldwide)
[Guidance Overview] Single Equity Fund Within Plan Did Not Give Rise to Violation of ERISA Diversification Requirement
Excerpt: "Plan participants' charge that single equity investment funds offered under a plan, rather than plan investments as a whole, were insufficiently diversified, did not state a claim under ERISA for fiduciary breach, according to the U.S. Court of Appeals in New York (CA-2) in Young v. General Motors Investment Management Corp. In addition, the participants did not allege sufficient facts to sustain a claim that fees charged by funds under the plan were excessive relative to the services rendered." (Wolters Kluwer)
Worker Preferences for 401(k) Fee Disclosure Highlight of New Study (PDF)
19 pages. Excerpt: "The topic of fee disclosures in 401(k) plans has recently garnered much attention in the government, media, and retirement industry. Findings from the 10th Annual Retirement Survey help to illustrate current levels of awareness of 401(k) fees, employer and worker preferences for receiving information about fees, and opportunities for increasing awareness." (Transamerica Center for Retirement Studies)
Amendment in the Nature of a Substitute for the '401(k) Fair Disclosure for Retirement Security Act of 2009' (PDF)
32 pages. (U.S. House of Representatives via The Spark Institute)
ABC Suggests Improvements to Fee, Advice Bills
Excerpt: "The House Subcommittee on Health, Employment, Pensions and Labor has approved The 401(k) Fair Disclosure for Retirement Security Act (H.R. 1984), which requires simple-to-understand fee disclosure on the investment options contained in employers' 401(k) plans, as well as the Conflicted Investment Advice Prohibition Act (H.R. 1988). . . . However, before the committee's vote, American Benefits Council President James A. Klein commended the subcommittee for preserving the broad-based provision of investment advice to employees while still protecting the many non-conflicted advice arrangements approved by IRS before the enactment of the Pension Protection Act of 2006 (PPA), but identified several liability issues raised under the bills." (PLANSPONSOR.com; free registration required)
Texas's Teachers' Pension Fund Adopts Pay-to-Play Limits
Excerpt: "Texas's $77.9 billion Teacher Retirement System, the sixth-largest public pension fund in the U.S., has adopted a policy prohibiting pay-to-play by companies trying to win business managing investments. As of July 1, those seeking management work from the fund will face disclosure requirements regarding placement agents and restrictions on the fees paid them, according to the new policy." (Bloomberg L.P.)
Detroit Pension Trustees Take Trips on Funds' Tab
Excerpt: "The trustees who oversee Detroit's two public pensions, their lawyers and staff spent $380,000 over the past year circling the globe to attend conferences -- often traveling in packs, with virtually no limitation on where they went or how often they traveled. Trustee Ronald Gracia spent the most time on the road -- billing the General Retirement System for $105,000 in travel, including three trips to Singapore and $18,600 on travel to Hong Kong, according to records provided by the pension funds." (Detroit Free Press)
Equity Firm Pays $30 Million in Pension Fund Case
Excerpt: "The private equity firm Riverstone Holdings agreed on Thursday to pay $30 million to resolve its role in a widening public pension fund investigation by the New York attorney general, Andrew M. Cuomo." (The New York Times; free registration required)
Text of Defined Contribution Plan Fee Transparency Act of 2009, H.R. 2779 (PDF)
26 pages. Excerpt: "To amend the Internal Revenue Code of 1986 to provide transparency with respect to fees and expenses charged to participant-directed defined contribution plans, and to improve participant communication." (U.S. House of Representatives via American Benefits Council)
Official Summary of Defined Contribution Plan Fee Transparency Act, H.R. 2779 (PDF)
2 pages. Excerpt: "Adds new Section 4980H to the Internal Revenue Code requiring notice to plan participants and taxes for failure to comply." (Rep. Richard Neal via American Benefits Council)
Key Revisions to Prior Version of Defined Contribution Plan Fee Transparency Act (PDF)
1 page. (Rep. Richard Neal via American Benefits Council)
SEC Requests Data from Two Dozen Firms in Pension Investigation
Excerpt: "The U.S. Securities and Exchange Commission is seeking information from more than two dozen pension funds, placement agents and other companies as it steps up an investigation into whether money managers made improper payments to win business. 'The SEC is interested in finders' fees and other payments,' spokesman John Nester said late yesterday. The SEC contacted pension-fund managers, agents that line up business for investment advisers and 'other intermediaries,' he said." (Bloomberg L.P.)
[Opinion] American Benefits Council Proposed Modifications to 401(k) Fair Disclosure for Retirement Security Act (PDF)
6 pages. Excerpt: "Chairman Miller previously introduced H.R. 3185, a bill that addressed both the disclosure of plan fees by a service provider to a plan administrator and the disclosure of plan fees by a plan administrator to participants. We very much appreciate the open and constructive approach that the Committee used in amending H.R. 3185 prior to its approval by the Committee last year. The revised bill, which has been reintroduced as H.R. 1984, included many very significant improvements to the proposed legislation." (American Benefits Council)
Links to Surveys Relating to ERISA Fiduciary Performance and Litigation
Excerpt: "The following surveys contain some great information about how fiduciaries are doing and the risks that they are facing: . . ." (ERISA Fiduciary Guidebook)
SEC Staff to Recommend Change for 12(b)-1 Fees - Investment News
Excerpt: "Securities and Exchange Commission Chairman Mary Schapiro has asked SEC staff to prepare a recommendation to change Rule 12(b)-1, she said [on Tuesday, June 2] at a Senate appropriations subcommittee hearing on the commission's fiscal 2010 budget request." (Investment News; free registration required)
Retirement Plan Trade Association Opposes Mandatory Index Funds in 401(k) Plans
Excerpt: "Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee, wants to reform 401(k) plans by [requiring] plan providers to offer investors at least one low-cost index fund. . . . [In a white paper, the SPARK Institute said it] 'does not believe that the wholesale use of passively managed funds by legal mandate will reduce plan fees and expenses or that policy makers should unilaterally determine which approach to investing is better for American workers saving for retirement . . . .' " (Financial Planning)
[Opinion] BrightScope's Response to the ICI on Fee Study
Excerpt: "ICI's response makes it clear that there are still several major fundamental differences between how the ICI calculates fees and how its critics calculate fees which is evidenced by the gap between the ICI's 0.72% median fee and the 3% fee number used by its critics. While the ICI's response clarified some areas of concern, it does not resolve the most important issues." (BrightScope Inc.)
[Guidance Overview] Second Circuit Affirms Dismissal of 401(k) Fee Lawsuit (PDF)
3 pages. Excerpt: "On May 6, 2009, the Second Circuit Court of Appeals affirmed the dismissal of two related actions, concluding that the plaintiffs failed to state claims based on allegations that plan fiduciaries failed to diversify plan investments and invested in funds that carried excessive fees. The Second Circuit's decision is unpublished, and hence carries no official precedential value. It nonetheless underscores the strict scrutiny that courts are increasingly applying to the plaintiffs' allegations in the high-profile 401(k) fee lawsuits." (Groom Law Group)
Investment Company Institute Response to May 13 Entry on BrightScope Blog about ICI's Research on 401(k) Fees
Excerpt: "The BrightScope blog [at http://www.brightscope.com/blog/2009/05/13/reconciling-the-401k-fee-estimates-of-the-ici-and-its-critics/] critiques the sampling used in the Defined Contribution/401(k) Fee Study published by Deloitte Consulting LLP and the Investment Company Institute, and attempts to 'reconcile' the Deloitte/ICI report with estimates of 401(k) fees made by others, particularly pension consultant Matthew Hutcheson. In summary, the blog entry suffers from several basic flaws . . . ." (Investment Company Institute)
[Guidance Overview] 401(k) Fee Litigation, May 2009 Update
The target page provides links to a 25-page paper titled: '401(k) FEE LITIGATION' and to a 38-page chart of 401(k) Fee Cases. (Groom Law Group)
[Opinion] Thoughts on Costs and Fees in 401(k) Plans
Excerpt: "I am thinking in particular today of the court's treatment of the amount and lack of transparency of the fees and costs in the plan before it as essentially not important, for all intents and purposes, either to participants, or, seemingly, to the court's analysis of the plan's obligations. A deeper look at the role of costs and fees, along with their impact, I suspect, might suggest an entirely different outcome to excessive fee cases such as Hecker, and it would not surprise me if at least some other courts in the future engage in such a closer examination and come to a different conclusion as a result." (Stephen Rosenberg of The McCormack Firm, LLC)
The Case for Employer-Sponsored Retirement Plans: Fees and Expenses (PDF)
Excerpt: "This [paper] examines two groups of concerns regarding plan fees and expenses. The first group relates to claims that employer-sponsored retirement plans and their investments are expensive and may erode American workers' retirement savings. The second addresses concerns that employer-sponsored retirement plans and their investment fees and expenses are not adequately understood and disclosed." (The Spark Institute)
Q&A with Rep. George Miller on 401(k) Legislation
Excerpt: "Rep. George Miller, D-Martinez, chairman of the House Education and Labor Committee, wants to reform 401(k) plans. His efforts have taken on increased urgency as many investors have taken hits of 30 percent or more on their 401(k) account balances over the last year. A key concern is that 401(k) providers do not clearly spell out the fees they charged to manage the investments and administer the accounts. . . . In a recent interview, Miller explained his view on fee disclosure and the prospects of getting legislation passed this year." (San Francisco Chronicle)
Finding Out How Your Company's Retirement Plan Compares with Others
Excerpt: "[T]here are a few ways you may be able to evaluate your 401(k) in terms of the cost, breadth of offerings, the company match and other policies, and perhaps even get a sense of how it rates versus other plans. The first place you should try is the Web site of a new independent rating service called BrightScope. The company uses data culled mostly from public filings to assign numerical scores to company 401(k) plans on a scale of 0 (lowest) to 100 (highest) based on such factors as the generosity of the employer match, the quality of the investment options, the vesting schedule and the level of fees." (CNNMoney.com)
Los Angeles City Council Wants More Information on Pension Fund Investment Placement Agents
Excerpt: "The City of Los Angeles has filed a motion instructing its three public pension funds to report to the city council before June 1 on the actions each has taken on pension reform in general and on the issue of placement agents specifically. The three pension funds are Los Angeles City Employees' Retirement System, Los Angeles Fire and Police Pensions and Los Angeles Water and Power Employees' Retirement Plan. The Los Angeles City Council's move comes after some of the city's pension funds have found themselves touched by a spreading pay-to-play scandal that originates in New York." (The Wall Street Journal)
Retirement Group to Propose Changes to 401(k) Disclosure Bill
Excerpt: "An industry association that represents the interests of retirement plan service providers this week will suggest modifications to proposed legislation that would require the industry to break out 401(k) fees on investors' statements. The Spark Institute will push for a less detailed version of a bill introduced last month by House Education and Labor Committee Chairman George Miller, D-Calif. For example, his bill calls for showing in actual dollars the cost to plan participants for their specific investments. The Spark Institute, however, will suggest providing investors with a list of the total expense ratios of the various investment options available in the plan, along with the dollar cost based on a hypothetical $1,000 investment." (Investment News; free registration required)
New York Attorney General Successful Where SEC Failed With 'Pay-to-Play' Pension Rules
Excerpt: "New York Attorney General Andrew Cuomo raised the stakes in his attack on 'pay-to-play' in the public pension-fund market as Carlyle Group agreed to a $20 million settlement that limits campaign contributions to officials who oversee state money. Carlyle, the world's second-largest private-equity firm, also agreed yesterday not to use placement agents to solicit investment business from public retirement plans nationwide. It is the first money manager to adopt Cuomo's new 'code of reform' for the municipal-pension market, though it probably won't be the last . . . ." (Bloomberg L.P.)
More 401(k) Plan Sponsors Considering Collective Trusts
Excerpt: "The number of collective investment trusts available to institutional investors is exploding, and the trusts are offering many 401(k) plan sponsors a less expensive way to provide competitive investment options to employees. 'Every penny matters now,' says Pamela Hess, director of retirement research for Hewitt Associates in Lincolnshire, Illinois. 'There are a lot of great ways collective trusts can be used to help employees and manage fees.' Chicago-based Morningstar reported 400 new collective trusts created between September 2007 and September 2008. In total, Morningstar tracks 1,000 collective trusts with $2.69 trillion under management." (Workforce Management; free registration required)
Ex-Wetherly Employee Pleads Guilty in New York State Pension Inquiry
Excerpt: "A politically connected California investment firm was drawn further into New York State's pension fund corruption investigation on Tuesday after a former employee pleaded guilty to a misdemeanor related to securities fraud. Julio Ramirez Jr., a former employee of the Wetherly Capital Group, based in Los Angeles, pleaded guilty to a violation of the Martin Act, a sweeping New York securities statute, said the office of Andrew M. Cuomo, the New York attorney general. Wetherly, run by Dan Weinstein, a prominent Democratic fund-raiser, has become enmeshed in parallel inquiries by Mr. Cuomo's office and the Securities and Exchange Commission, but so far has not been charged." (The New York Times; free registration required)
Public Pension Funds Scurrying to Cut Off Future Pay-to-Play Action
Excerpt: "Public pension fund executives from Oklahoma to Washington state are probing their managers' relationships with third-party marketers and placement agents as a result of the pay-to-play scandal in New York. Public plans nationwide are doing everything from banning placement agents to beefing up disclosure policies that now will include third-party marketers used by investment managers and consultants. A number of plans are going further, investigating relationships between consultants and alternative investment managers named but not charged in the New York criminal indictments." (Workforce Management; free registration required)
401(k) Fee Critics Overstate Problem, ICI Chairman Says
Excerpt: "'What they don't mention is the long list of services that 401(k) plans provide,' including investment management and record keeping as well as legal services, audits, websites, call centers and participant education, John Murphy, chairman of the Investment Company Institute, said in a speech to about 800 mutual fund executives at the group's general meeting in Washington." (Investment Company Institute)
[Opinion] Who Shredded Our Safety Net?
Excerpt: "Fees have always been one of the built-in scams of mutual funds, which charge investors for managing, operating, and even marketing and advertising the fund. On average, the fees add up to 1.5 percent of the value of an account, but they can run as high as 3.5 percent a year. . . . Congress, of course, has known about this scandal for years, and has periodically floated legislation to limit certain types of mutual fund fees, or at least demand full disclosure." (Mother Jones and the Foundation for National Progress)
Political Agents Get Subpoenas in NY Pension Probe
Excerpt: "Investigators probing the role that lobbyists known as ''placement agents'' played in arranging state pension fund investments have subpoenaed a number of politically connected New Yorkers who quietly picked up big paychecks for doing such work. State officials on Wednesday released a list of dozens of agents who received hefty payouts in recent years for acting as middlemen between investment firms and pension fund officials." (AP via The New York Times; free registration required)
More States Start Pension Fund Investment Inquiries
Excerpt: "A survey of practices across the country portrays a far-reaching web of friends and favored associates: political contributors, campaign strategists, lobbyists, relatives, brokers and others, capitalizing on relationships and paying favors. These influential figures can determine how pension funds are invested, as well as state university endowments, municipal bond proceeds, tobacco settlement funds, hurricane insurance pools, prepaid tuition programs and other giant blocks of public money. 'What has developed is a corrupt system, where Wall Street, various fiduciaries, politicians and corporate managers are draining America's savings,' said Frederick S. Rowe, a hedge fund manager who serves on the Texas Pension Review Board, an oversight body." (The New York Times; free registration required)
Industry-Wide Investigation to Examine Role of Placement Agents, Intermediaries and Middlemen in Public Pension Fund Investments (PDF)
5 pages. Excerpt: "Andrew Cuomo, the New York State Attorney General ('NYAG'), has announced that he and the attorneys general of 36 other states have formed a nationwide task force to share information about, and investigate, potential wrongdoing in the business of obtaining investments by state and local pension funds. As part of Mr. Cuomo's investigation into 'pay-to- play' practices, his office issued more than 100 subpoenas to investment management firms and funds that received investments from public pension funds in New York and to the so-called 'placement agents' or finders used by those firms to assist in obtaining the investments." (Paul, Hastings)
[Opinion] So Much Public Pension Money Brings Big Temptations
Excerpt: "Regarding 'The Public Pension Shakedown' (Review & Outlook, April 20): It's no secret in the investment industry that the testing of ethical boundaries accelerates at a geometric rate when one moves from the highly regulated corporate pension-plan market to the loosely regulated state and local plan market, to the Wild West of union plans. (The federal Social Security system is, of course, in a different league with no real regulations, no funding 'lockbox,' and no prudent-man investment rules.)" (The Wall Street Journal)
[Guidance Overview] Consider Paying Expenses from the Retirement Plan Trust
Excerpt: "The general rule is that costs of administering the plan and communicating with participants may be paid by the retirement plan. Costs of plan design must be paid by the company. It is a prohibited transaction for the retirement plan to pay an expense that should have been borne by the company, such as a plan design change study. Examples of expenses that may be paid by the plan include audit fees, fees for preparing communication materials such as summary plan descriptions, and fees for legal advice regarding plan operation. Examples of fees that may not be paid from the retirement plan include fees paid for a study to redesign retirement plan benefits or fees to consider plan options in implementing a new law change." (Poyner Spruill LLP)
12(b)-1 Fee Reform Still Urgent Issue
Excerpt: "The Securities and Exchange Commission plans to re-examine the issue of 12(b)-1 fee reform, Chairman Mary Schapiro pledged today at the Mutual Fund Directors Forum Annual Policy Conference in Washington.'I am absolutely committed to a meaningful and open-minded review of Rule 12(b)-1,' she told 170 independent mutual fund directors who attended the conference." (Investment News; free registration required)
401(k) Reform on the Horizon? Q&A with Rep. Miller
Excerpt: "Rep. George Miller, a California Democrat and chairman of the House Education and Labor Committee wants to reform 401(k) plans. His efforts have taken on increased urgency as many investors have taken hits of 20 to 30 percent on their 401(k) account balances over the last year. A key concern is that 401(k) providers do not clearly spell out the fees they charged to manage the investments and administer the accounts. The lack of clear disclosure makes it difficult for your employer to comparison shop to offer you the best plan. It also makes it more difficult for you to chose among the various mutual funds offered in your plan. Without this knowledge, you may be paying too much, costing yourself thousands of dollars." (Syracuse Online LLC)
New York Attorney General Announces Multi-State Effort on Pension Abuse
Excerpt: "New York Attorney General Andrew M. Cuomo has announced a multi-state cooperation in revealing pension fund abuses. 'I just held a briefing with 100 individuals from 36 Attorneys General's Offices to discuss findings of our ongoing pension fund investigation. We decided to create a multi-state task force to explore pension fund abuse so states can share vital information to prosecute wrongdoing and facilitate nationwide reform,' Cuomo said. He added that the task force will allow for a unified, efficient method of gathering information." (PLANSPONSOR.com; free registration required)
New York Attorney General Expands Pension Pay-to-Play Probe
Excerpt: "New York Attorney General Andrew Cuomo says he's issuing subpoenas to more than 100 investment firms and their agents in his probe of an influence-peddling scandal affecting some of the nation's biggest public pension funds. The investigation now touching on several states will look at individuals and companies who make or receive improper payments during lucrative business dealings with state and city pension funds. State and federal law requires most securities brokers to be licensed, but Cuomo is looking to see how many unlicensed agents may be involved in pension investment deals." (AP via Forbes.com)
[Opinion] The Ever-Deepening New York State Pension Mess
Excerpt: "So far, the growing scandal has not brought about any serious calls for reform in New York. The state comptroller, Thomas DiNapoli, and the New York City comptroller, William Thompson Jr., have proposed banning pension fund investments that involve placement agents. That is only a start. The state also needs an independent board to help the comptroller oversee investments. Right now, Mr. DiNapoli is the sole trustee of $122 billion. That is far too much power in the hands of one person. Mr. DiNapoli argues that boards, too, are vulnerable to corruption, but they are not nearly so exposed as one lone politician." (The New York Times; free registration required)
[Guidance Overview] Class-Action Lawsuits Filed Against Country's Biggest Corporations Alleging Payment of Excessive Fees to Mutual Funds in Workers' Retirement Plans
Excerpt: "The court battle continues over the class-action lawsuit against Wal-Mart, alleging excessive fees and conflicts of interest by 401(k) plan fiduciaries. Heavy hitters are lining up on opposing sides: The DOL on behalf of the employees and three large business organizations on the other." (Human Resource Executive Online)
[Guidance Overview] 401(k) Fair Disclosure Bill Is Introduced
Excerpt: "As expected, George Miller (D-CA), Chairman of the House Education & Labor Committee, introduced a bill (H.R. 1984) to impose special reporting and disclosure rules ? focused primarily on investment related fees ? for individual account plans. The bill is similar to one which the Committee approved in April 2008, but has some notable additions, including the requirement that a plan must include at least one low-cost index fund to be eligible for ERISA ? 404(c) protection." (Deloitte via BenefitsLink.com)
$346 Median Administration Fee for 401(k) Plans
Excerpt: "The median fee covering administration, recordkeeping, and investment services was $346 per year for the 130 defined contribution plans surveyed by Deloitte and the Investment Company Institute in late 2008. As a percentage of plan assets, the annual median fee was 0.72%, with 10% of the plans reporting fees of 0.35% of assets or less and 10% of the plans reporting fees of 1.72% of assets or greater." (Wolters Kluwer)
U.S. House Examines 401(k) Fees
Excerpt: "The House Education & Labor Committee last week proposed new rules for 401(k) disclosure that will give investors greater transparency into the fees they are paying, but some 401(k) advocates say the new rules are too aggressive and unnecessary. House Resolution 1984, also called the 401(k) Fair Disclosure for Retirement Security Act of 2009, aims to make it easier for employees to pick the best retirement options in their 401(k). Currently, the law does not require all fees to be disclosed, and it can be difficult for workers to find fee information that is already available." (Financial Planning)
House Bill on 401(k) Fee Disclosure Introduced, Discussed at Hearing
Excerpt: "Legislation that would require that all fees be disclosed to 401(k) plan participants in simplified form is needed, most of the panelists testified at a hearing on the legislation Wednesday, April 22. . . . Investment management fees are disclosed as a percentage of assets in plan prospectuses, administrative fees are disclosed in dollar amounts in Department of Labor Form 5500, and other account fees specific to participants are on quarterly statements . . . ." (Workforce Management; free registration required)
[Opinion] Letter of Support for H.R. 1984: the '401(k) Fair Disclosure for Retirement Security Act of 2009' (PDF)
2 pages. Excerpt: "On behalf of the American Society of Pension Professionals & Actuaries (ASPPA), the Council of Independent 401(k) Recordkeepers (CIKR), and the National Association of Independent Retirement Plan Advisors (NAIRPA), we hereby express our support for 401(k) fee disclosure legislation (H.R. 1984) which was recently reintroduced in the 111th Congress." (American Society of Pension Professionals & Actuaries)
[Opinion] Notes on the '60 Minutes' Coverage of 401(k) Plans
Excerpt: "By now, you have no doubt either watched, had recommended to you, or at least heard about the '60 Minutes' special that ran a week ago Sunday. If you haven't watched it yet, you should. Forewarned is forearmed, as they say. No, it wasn't very long (less than 15 minutes), but it was certainly enough to fuel the fires of those who are anxious to put the 401(k) out of our misery. Short as it was, you could basically cleave the segment into two propositions: that retirement savings shouldn't be invested in stocks (or least not so much in stocks), and that fees -- and hidden fees at that -- are at least as much to blame for the decline in balances as the markets. Oh, and the real culprits -- the ones that created the 401(k) and convinced employers to shed their commitment to pensions -- are the same ones that have been fleecing all of us for decades. Well, at least we know who to sue." (planadvisor)
Mutual Fund Fees Face Legal Scrutiny
Excerpt: "Two legal cases that will be decided by courts this year may significantly affect the mutual fund and investment advisory industries. Financial planners and advisers should be aware of the cases and consider the likely impact on the industry if the plaintiffs win. Both cases involve the level of fees charged to mutual funds by their advisory firms. The U.S. Supreme Court has agreed to hear one case, that of Jerry Jones et al. v. Harris Associates LP. In the other, Gallus et al. v. Ameriprise Financial Inc., the 8th U.S. Circuit Court of Appeals overturned a district court decision in favor of Minneapolis-based Ameriprise and sent the case back to the district court 'for further proceedings not inconsistent with the views set forth in this opinion.'" (Investment News; free registration required)
[Opinion] Hecker, InsideCounsel and Defensive Plan Building
Excerpt: "[W]hat really is so hard about looking closely at fees as part of putting together a 401(k) plan's investment options from here forward, and documenting that this was undertaken, as an additional step in defensive lawyering and plan building, rather than just stopping at the Hecker level of analysis and conduct? It doesn't take all that much - there are independent fiduciaries out there right now who will try to do it for you - but the legal protection in the long run, and the participant goodwill in the short run, that it will buy far outweighs the costs." (Stephen Rosenberg of The McCormack Firm, LLC)
Text of the ''401(k) Fair Disclosure for Retirement Security Act of 2009'' (PDF)
31 pages. Excerpt: "To amend title I of the Employee Retirement Income Security Act of 1974 to provide special reporting and disclosure rules for individual account plans and to provide a minimum investment option requirement for such plans." (U.S. House of Representatives via American Benefits Council)
Myths vs. Facts: The 401(k) Fair Disclosure for Retirement Security Act
Excerpt: "Myth: H.R. 1984 will require too much disclosure and will confuse 401(k) participants. Fact: H.R. 1984 would require clear and simple fee disclosure so that workers can make sound investment decisions for themselves. The biggest problem currently facing workers with 401(k) plans is that there is too little disclosure of fees, not too much. Plan participants should be presented with the facts and then be allowed to make their own decisions." (U.S. House of Representatives Committee on Education and Labor)
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