WASHINGTON The Employee Benefits Security Administration is seeking comments on ways to improve the information participants receive about administrative and investment fees and expenses charged to them in 401(k) plans. The agency is specifically interested in comments about what sort of fee information plan participants should consider when investing their retirement savings, according to a news release. It is also seeking information on who should be required to provide the relevant fee information to participants and how it is should be supplied.
The Labor Department originally announced its intention on March 6 to seek comment on enhanced 401(k) fee disclosures. The request for comments will be published in the Federal Register on Wednesday.
20% of large DC plans use auto enrollment
GREENWICH, Conn. Automatic enrollment has been adopted by roughly 20% of companies with defined contribution plan assets of $250 million or more, and another 17% plan to add the feature, according to Greenwich Associates 2007 report on U.S. defined contribution retirement plans. At smaller plans, 28% use automatic enrollment and another 24% plan to start.
The survey also found that plan sponsors are increasing their matching contributions. Some 95% of surveyed companies with DC plan assets of more than $250 million make matching contributions, as do 84% of smaller plans. Among large plans, nearly one in 10 increased their match over the past year, and another 13% plan to do so over the next one to three years. Among smaller plans, 12% have recently increased their matches, and 16% plan to do so.
U.K. DC plan administrators not confident
LONDON More than a third of U.K. corporate defined contribution plan administrators are not confident that their plans would provide employees with an adequate income in retirement, especially when employees choose a default option that provides low risk and low returns, according to a new SEI study.
The survey found that many default options are still based on index funds, which do not allow the opportunity of outperformance available through active management, according to the survey results. About 2 out of 3 respondents feel there are shortcomings with the current default options.
Roughly 60% of officials at contract defined contribution plans, which work much like a 401(k), believe they are not qualified to deal with pension issues, and 48% believe their employees are not sufficiently informed to make investment decisions.
SEI interviewed 100 executives responsible for defined contribution plans with £10 million ($20 million) to £500 million in assets during the first quarter, according to spokeswoman Sarah Caddy.
$572 million in 401(k)s shift to bonds in March
LINCOLNSHIRE, Ill. Participants shifted $572 million in 401(k) assets from equity to fixed-income options in March, nearly 94% of all inflows, according to the Hewitt 401(k) index. Participants moved $342 million into bond funds, $220 million into stable value and $154 million into money market funds. As a result, participants overall equity allocations decreased to 68.3% as of March 31, from 68.6% at the end of February.
SSgA modifies target-date investments
BOSTON State Street Global Advisors enhanced its suite of target-maturity asset allocation funds, adding broader international exposure, TIPS, credit bonds and stable value investments, said Arlene Roberts, spokeswoman. The funds have been adjusted to modestly increase a retirees equity allocation. The funds, formerly known as the SSgA Age-Based strategies, have been renamed the SSgA Target Retirement strategies.