Federal officials proposed rules Thursday to ensure better disclosure of the fees levied to administer 401(k) retirement accounts, but critics immediately blasted the measures as inadequate.
The Department of Labor said its proposal was designed to address concerns that retirement nest eggs are being eroded by obscure fees and deductions that employees may not even know they are paying.
"We are working quickly to implement regulations that foster fair, competitive and transparent prices for services as well as combat excessive or hidden plan fees," Labor Secretary Elaine L. Chao said in a statement.
The proposal would force companies that administer 401(k) plans or that provide investment funds to report the compensation they get for their services, both directly and indirectly.
It also would require that the provider disclose any potential conflicts of interest. For example, a firm that runs a 401(k) plan might receive money or other compensation from a mutual fund company to include its products in the menu of investments it offers employees.
Critics said the proposal had one major flaw: The disclosures would be to plan "fiduciaries" -- employers -- and not employees, who typically bear the brunt of the overhead costs.
"It's clear that the rules are inadequate because they fail to require disclosure of fees and conflicts of interest to workers," said Rep. George Miller (D-Martinez), chairman of the House Education and Labor Committee, who has proposed legislation that would mandate such disclosures.
Miller introduced legislation in July that would require fee disclosures directly to participants in the plan, but the proposal has not progressed out of committee.
Some business groups have argued against more disclosure, contending that the information could be confusing to employees and make them less likely to contribute to a 401(k) plan.
James Klein, president of the American Benefits Council, a group representing employers, said it was "very important that the plan information is available to everyone and everyone is informed about their plans and the expenses of their plans."
"But the devil is in the details," he said.
Klein and several other experts declined to comment specifically about the rules, however, because the details were still sketchy. The Labor Department issued a summary but has not posted the entire proposed regulation.
