A new study released by insurance industry researcher LIMRA shows that half of defined contribution employees are still not aware of how much they pay in annual fees and expenses, despite fee disclosure requirements added in 2012. That number — exactly 50% — remained unchanged from 2012 to 2013. LIMRA surveyed employees before and after the disclosure communications were conducted.
“There was much speculation on how consumers would respond to the disclosure notices, yet our consumer surveys and discussions with plan service providers indicate that there has been limited reaction to learning about their fees and expenses,” says Alison Salka, corporate vice president and director of LIMRA Retirement Research. “The disclosure notices — or the discussion of them — did seem to improve the knowledge of those who believed they didn’t pay any fees or expenses,” adds Salka.
LIMRA surveyed 974 employees with DC plans in May 2012, prior to the disclosure statements going out, and again in January 2013 after all had received the communications. In January only 22% of DC users thought they don’t pay any fees at all, compared with 38% who thought the same in 2012.
LIMRA’s spokeswoman Catherine Theroux says most people are looking for their gross rate and their bottom line, not at disclosures. “We asked in another study in August and nearly two thirds of people with DC plans admitted to spending two minutes or less on their disclosures,” she says. “It’s not a simple disclosure statement so I’m not sure if that had something to do with it.”
Of the 28% who are aware in 2013 of the fees they pay, nearly 75% felt the fees were reasonable.
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