Skip to content
Link copied to clipboard

Fund fees too high, but what can be done?

DEAR HARRY: My employer has a pretty good pension plan to which it matches our contributions up to 4 percent of our salaries. A little while ago, I saw a study that said the cost of fund fees for a median-income earner over a period of 40 years averaged m

DEAR HARRY:

My employer has a pretty good pension plan to which it matches our contributions up to 4 percent of our salaries. A little while ago, I saw a study that said the cost of fund fees for a median-income earner over a period of 40 years averaged more than $75,000. As a result, I checked out the funds that were available in our plan, and I found out that they were almost all at the high end of the fee spectrum for similar funds in the same category (large cap, small cap, etc.). I don't want to create waves with my employer (we had a big layoff early in 2009), so I'm sitting here with information I hesitate to use. That's a big chunk of money to lose.

WHAT HARRY SAYS: Contact the plan managers and ask if they can either add more funds to choose from or make available a different stock class of the funds presently on the list. Don't go in unarmed. Get low-cost mutual funds in the same categories for comparison as well as other stock classes from present funds. You will find that no-load funds such as Fidelity, Rowe Price and Vanguard will give you lower costs. If the managers don't want to move on this, cut your plan contributions down to the point where you get the 4 percent match and put the additional amounts in a Roth or regular IRA where your choices are virtually unlimited.