Getting the Word Out
DOL proposes new fee-disclosure rule

THE U.S. DEPARTMENT OF LABOR has issued the last portion of a proposal that would require fee disclosures regarding employee-directed retirement plans, and most experts and advocates seem pleased with the changes. The regulation would require plan sponsors to regularly disclose to employees general information about the plan and the fees and expenses paid by plan participants.

The new rule also requires plan sponsors to provide information on past performance of the plan’s individual investment options. The changes are projected to cost plan administrators and employers about $800 million over the next 10 years. However, the DOL estimates that overall savings (based on the hours that participants would otherwise spend trying to find information on their plans) will reach $6.1 billion.

The Washington-based American Benefits Council (ABC), a lobbyist group that represents mostly Fortune 500 companies with health and retirement plans, said it was pleased that the rule requires disclosure of investment performance as well as fees, according to ABC senior counsel Jan Jacobson. “Participants, in deciding on what they invest in, should not make decisions just on fees,” Jacobson said. “They need other information on risk and return.”

However, Jacobson noted that the January 2009 deadline for implementing these changes will make it hard for employers to comply.

At least one member of Congress said the proposal falls short. Rep. George Miller (D-Calif.) said the proposed changes “would still allow financial firms to hide many fees that they take from 401(k) participants’ accounts.” Other U.S. House staffers have expressed concern that the disclosure information, to be displayed on a simple chart, provides too little information.

DOL officials have defended the plan, saying the proposal will provide basic information for employees, with the idea that workers can gather additional facts on their own.  

Tightening the Belt
‘Hardship Withdrawals’ Signal Tough Times

WITH THE ECONOMY in a slump and gas and food prices putting pressure on employees, many employers are looking to “recession-proof” their benefits plans and help their workers cope with the current economic downturn.

The extent of the economic crunch on employees is demonstrated by a recent report by Mercer, in which the percentage of workers making “hardship withdrawals” from their 401(k) plans jumped 21 percent in the first half of 2008 compared with the same period last year.

“Benefits have been getting more expensive relative to employee wages and inflation for the last seven years, and now there are so many additional expenses piling on for employees,” Marsh Senior VP George Lane told a recent roundtable of HR professionals in Washington, D.C.

“Gas prices, food prices – that’s all just piling on to the issue we’ve been dealing with for a number of years now, and . . . benefit costs (are) going up faster than payroll and inflation.”

While there’s little employers can do in the short term about rising health costs and retirement benefit fees, some businesses are trying some innovative tactics, such as offering flex time, telecommuting and compressed work weeks.

Some employers are sensing a need of more financial planning services for workers.

“Everyone used to believe that giving specific financial advice and coaching in the workplace was a big liability, so they’ve stayed away from it,” Lane said. “But it’s also a huge opportunity” to help employees improve their overall financial health.

. . . . . . . . . . . . Bulletin Briefs . . . . . . . . . . . .

• New research by insurance firm Guardian found that two-thirds of employees believe wellness programs are effective in promoting healthy lifestyles, but only 30 percent of polled employees have participated in a wellness program recently.