By Amy Blume, NCL Public Policy Intern
At a press conference last Wednesday, we learned that many participants of 401(k) plans lose up to 28 percent of the retirement savings that they would have over their working life due to Wall Street’s high investment fees. The worst part is that most people are entirely unaware of how much of their money goes to fees because the bulk of these fees, which go straight into Wall Street pockets, are hidden fees, invisible, and undisclosed.
Several members of the House of Representatives Education and Labor subcommittee are encouraging adoption of an amendment provision to H.R.4213: “American Jobs and Closing Tax Loopholes Act,” hoping to remedy the problem. Chairman George Miller (D-CA) wrote the provision to make information about fees more accessible for consumers and their employers. The provision requires investment companies to disclose all fees upfront and to help workers understand their investment options. But the Senate has been resistant to the provision, likely due to pressure from Wall Street.
To get its point across and urge the Senate to adopt the provision in the bill, the House subcommittee leadership took an innovative approach in a June 16 press conference. The committee designated an apple pie for each Finance Committee Senator, each pie marked with a specific Senator’s name. In each one, a large piece was cut out – equaling roughly 28 percent of the pie – and replaced with a sign which read, “Wall Street’s cut of your 401(k) pie.”
The visual was humorous but also effective. Participants in 401(k) funds deserve to know where their money is going and how much they’re paying in fees upfront. 401(k) plans and other investment options are complex enough without the side problems of hidden fees or penalties. People rely on retirement plans for their future and use these funds to know when a family member can stop working. It’s important for consumers to know how much they’re paying for their investments, with fair and accurate disclosure of all potential taxes and fees, and NCL supports the disclosure amendment.
Watch statements from the Press Conference here.