Study Finds Fee Disclosure Policy Needed for Defined Contribution Pension Plans

TORONTO, Aug. 27 /PRNewswire/ -- A new research paper from the Rotman
International Centre for Pension Management finds that a standardized
international policy on fee disclosure would help pension plan participants
become better informed consumers of Defined Contribution (DC) plan investment
and administrative services. Each year participants in DC pension plans around
the world pay billions of dollars in fees.
"Many people do not understand how large an effect an apparently small
difference in fees can make on account balances at retirement," say report
authors John Turner and Hazel Witte. "Greater fee disclosure should be
accompanied by great information on how to interpret the importance of fees."
Taking into account the insights from behavioral economics, the study,
"Fee Disclosure to Pension Participants: Establishing Minimum Requirements"
proposes a standardized fee disclosure model which is used to assess the
effectiveness of current disclosure requirements in Australia, Canada, Chile,
Sweden, the United Kingdom, and the United States. The model shows that Sweden
and Australia receive the top two rankings for disclosure effectiveness. While
the cost of greater disclosure has been raised as an issue, Turner and Witte
say that the cost borne by pension contributors would be at most small and
there could be a reduction in costs paid due to contributors switching to
lower cost funds. The complete study is online at www.rotman.utoronto.ca/icpm.
The Rotman International Centre for Pension Management (ICPM) has become a
global catalyst for improving pension management. The Centre sponsors
research and fosters dialogue that focuses on building better pension 'deals',
better pension fund organizations, and better pension legislation and
regulation. In addition, the Centre looks for opportunities to raise
pensions-related content in undergraduate, graduate, and executive programs at
the Rotman School and other education-oriented forums. Further details on the
Rotman International Centre for Pension Management, including its research
program, are available at www.rotman.utoronto.ca/icpm.
The Rotman School of Management at the University of Toronto is
redesigning business education for the 21st century with a curriculum based on
Integrative Thinking. Located in the world's most diverse city, the Rotman
School fosters a new way to think that enables the design of creative business
solutions. The School is currently raising $200 million to ensure Canada has
the world-class business school it deserves. For more information, visit
www.rotman.utoronto.ca.
SOURCE Rotman School of Management

Ken McGuffin, Manager of Media Relations of the Rotman School of Management at
University of Toronto, +1-416-946-3818, mcguffin@rotman.utoronto.ca