PSCA survey: fee disclosure yields few changes in investment decisions

By National Underwriter

National Underwriter


By Warren S. Hersch

Nearly all sponsors of defined contribution plans report no change in the investment decisions of plan participants as a result of fee disclosure information, new research reveals.

Plan Sponsor Council of America, Chicago, released this finding in a survey on the impact of fee disclosure regulations on defined contribution plan participants. The survey, conducted in October, received 176 responses from defined contribution plans sponsors.

Plan sponsors with 1-99 participants (eligible employees with an account balance) accounted for the largest share of the respondents (27.8 percent). Plans with 100-999 participants, 1,000-4,999 participants and 5,000-plus participants constituted 21.6 percent, 26.1 percent and 24.4 percent, respectively, of the remaining respondents.

More than 9 in 10 plans sponsors (95.9 percent) report no change in the investment decisions of plan participants as a result of fee disclosure information, the survey shows. Less than 3 percent of the respondents identified changes in investment allocations, the highest percentage (2.6 percent) recorded among plan sizes servicing 100-999 plan participants.

The survey found no changes in participant behavior when respondents were asked about participants’ changes in deferral rates or participation rates.

One in seven 15.4 percent of the plan sponsors sent out a request for proposal/request for information (RFP/RFI) as a result of the fee disclosure regulation, the survey shows. Respondents with 1-99 employees accounted for the highest percentage of plans (17.4 percent) that sent out an RFP/RFI.

Those with 100-999 employees, 1,000-4,999 and 5,000-plus plan participants accounted for 25 percent, 13 percent and 7.3 percent of respondents, respectively.

The survey additionally reveals that an average of 1.4 percent of participants asked questions regarding fee disclosure information they received. Plans with 1,000 to 4,999 participants accounted for the largest percentage (1.4 percent) that asked questions.

Plans with 1-99 participants, 1000-999 participants and 5,000-plus participants accounted for 1.3 percent, 1.3 percent and 0.9 percent, respectively.

Originally published on LifeHealthPro.com