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.