Compliance May 11, 2018

Public Pension Fund Files Complaint Against Wells Fargo Over Compensation Received

The bank admitted that because of “a system error,” revenue sharing payments were not credited to the retirement fund, but says the error has been fixed.

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The Chattanooga Fire & Police Pension Fund filed a complaint in Tennessee state court asking for a full accounting from Wells Fargo of any compensation it has received from third parties during its years as trustee of the fund.

According to correspondence between the fund and the bank reviewed by The Wall Street Journal, the bank admitted it had kept revenue-sharing payments it owed to the retirement fund. Wells Fargo said it was the result of “a system set-up error.”

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According to the Wall Street Journal, the bank recently told the pension fund that the system problem had been corrected. However, the retirement fund disagrees with the amount of revenue sharing Wells Fargo says it received.

In a statement provided to PLANSPONSOR, Wells Fargo said: “We acknowledge that because there was a change directed by the client in 2017, we made an error in setting up the revenue sharing associated with that change appropriately, and the revenue share rebates did not occur as intended. We are sorry this error occurred, and upon discovery, the issue was fixed, and the total revenue share received from the third party fund companies (approximately $15,000) was returned to the pension fund. We have been in active dialogue with the client and have been committed to resolving this matter and are disappointed they felt the need to file a complaint requesting information we have provided and are very willing to provide.”

Despite Wells Fargo’s admission, the retirement fund also filed a whistleblower complaint with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission outlining the bank’s alleged improprieties.
Data and Research May 11, 2018

Small Business Owners Need More Knowledge of Retirement Plan Fees

Only 49% said they had read their fee disclosure in the prior year and had understood it; 44% said they had not read it; and 7% said they had read the disclosure but did not understand it.

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Many small business owners and managers expressed limited knowledge about how much they or their employees pay in fees to their retirement plans, according to a survey conducted by The Pew Charitable Trusts.

Only 19% of the small to mid-size business leaders said they are “very familiar” with their retirement plan fees, while 34% said they are “not at all familiar” with those fees. Forty-seven percent indicated they are “somewhat familiar” with their retirement plan fees.

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Only 49% said they had read their fee disclosure in the prior year and had understood it; 44% said they had not read it; and 7% said they had read the disclosure but did not understand it. But decision-makers were divided over the benefit of more information. About half said additional information would be “somewhat” (35%) or “very” useful (14%), while a nearly equal share said this would be “not at all” (26%) or “not too” useful (24%).

Analysis of survey findings shows that those who said that they had read but did not understand plan disclosures were more than three times as likely as other business leaders to say that additional information would be “very useful.” Also, an examination of which employers read disclosures—regardless of their understanding—showed that those with fewer employees were less likely to have done so.

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