NAGDCA panelists discuss how DC administrative fees are changing

The way defined contribution plans deal with administrative fees is changing, agreed panelists at a fee session on Tuesday at the National Association of Government Defined Contribution Administrators annual meeting in San Diego.

Implicit asset-backed fees, such as those in a revenue-sharing approach, are being replaced with head-count and hard-dollar fees, both of which are more visible to participants, said Laurel Ludden, senior vice president of VALIC in Houston.

What hasn't changed, Ms. Ludden said, is these fees are still paid by the plan and/or participants.

Gregory Settle, senior consultant at Hyas Group, Olympia, Wash., said his firm prefers what he calls zero revenue share, an explicit fee charged to all participants. That way, he said, administrative fees are no longer connected to investments the way that fees based on revenue sharing are.

Mr. Settle also likes hard-dollar fees based on the participant's account balance, but suggests a limit of, say, $150 per year.