By Paula Aven Gladych
has been a big deal for private defined contribution plans, but a survey by the National Association of Government Defined Contribution Administrators found that some government-sponsored plans — 15 percent — don’t have a clue about the fees being charged to plan participants.
An additional 12 percent of government plans said they didn’t fully understand the fees in each fund of their core lineup.
The survey, which was conducted in the first quarter, found that out of 127 responding federal, state and local government defined contribution plans, the average investment management fee was 0.31 percent. If the fee included recordkeeping costs, it was 0.46 percent.
Elsewhere, the survey found that 54 percent of responding government DC plans
said they offer loans, while 46 percent don’t. Out of the plans that do offer loans, 27 percent said that participants can continue making payments via check or money order after they leave their job, while 91 percent said that participants can continue making payments after they leave but must sign up for automatic debit from a back account or the loan will be defaulted.
The average outstanding loan balance of the responding plans was $6,092.
Respondents also were asked how costs were handled for their participant communication and education efforts. Fifty-six percent reported that their plan provider embeds the cost as part of the overall service offering; 23 percent reported that the plan sponsor
incurs the cost and 21 percent said the costs are passed directly on to the participants.
The 127 government defined contribution plans included in this survey had a total of $170 billion in assets.
Originally published on BenefitsPro.com