Although defined contribution plan participants should receive fee disclosures from their plan sponsors by Aug. 30, a new study by LIMRA shows that the vast majority of those people only spend about five minutes looking at them and most just skim them to “see if they reveal something ‘important.’”
One in five people said they rarely or never read disclosures that are sent to them.
In “Consumers’ Retirement Perspectives” for the third quarter of 2012, LIMRA found that men are more likely than women to read disclosures and younger participants are slightly more likely than older participants to read them.
The length and technical nature of disclosures are the most frequently cited reasons for not reading them, the report found. When participants want plan information, they have better luck going to their provider’s website. Younger participants are more likely to go to their employer for more information.
While 51 percent of plan participants said they have not taken action as a result of a disclosure, almost one in five reported that they changed contribution allocation or increased their contribution level. Seventeen percent said they contacted their account provider.
Participants had the highest levels of understanding of their contribution limits when it came to retirement account features. Companies took the opportunity to educate participants on investment options, fees and the taxation of withdrawals. Twenty-four percent said they did not understand these features very well or not at all.
Men were most likely to indicate they understand their account features “very well,” the report found.