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TIAA-CREF AGREES TO CEASE MISLEADING TSP ROLLOVER ADS, FIDELITY DOES NOT FOLLOW SUIT

WASHINGTON - Today U.S. Senate Special Committee on Aging Chairman Herb Kohl (D-WI) released letters he received from TIAA-CREF and Fidelity concerning their advertising campaigns encouraging federal employees and retirees to move their retirement savings out of the Federal Thrift Savings Program (TSP) and into higher-fee accounts. On July 15, preceding an Aging Committee hearing on 401(k)s, Kohl sent letters to the companies running the advertisements with a request that they reexamine their marketing practices. TIAA-CREF immediately responded, informing Chairman Kohl that they would no longer circulate the misleading TSP rollover ads. In contrast, Fidelity indicated in a letter dated July 26 that they would continue with their ad campaign, which characterizes TSPs as "old" and encourages participants to roll over their government accounts to one of their 401(k) or IRA products.
 
"I applaud TIAA-CREF's decision to pull the ads, and am disappointed that Fidelity has not chosen to follow suit," said Kohl. "The TSP has the lowest administrative costs of any retirement program in the country and I think these misleading ads are a disservice to hard-working public servants."
 
In their letter, Fidelity defended their position, stating: "Fidelity's rollover IRA offers investors extensive investment flexibility with no additional account fee, the extra convenience of aggregating retirement assets, and financial guidance services.  Because each investor has unique needs, Fidelity offers one-on-one consultation to help better identify options for employees who have left their jobs, as well as to help them understand the potential impact of each choice they may be considering."
 
At the July 16 Aging hearing on 401(k) leakage, Gregory Long, Executive Director of the Federal Retirement Thrift Investment Board, expressed dismay over the advertisements: "People who leave the federal service are welcome to leave their retirement funds with us, and we actually encourage them to do so because the TSP has one very big advantage over virtually all private-sector plans, [and] that is a tremendously attractive fee structure." Long added that in 2007, the Thrift Investment Board accepted over $478 million in funds being rolled over into the TSP from private sector 401(k) and IRA accounts.
 
Chairman Kohl has expressed ongoing concern over the high, and often hidden, fees many plans charge their participants. Over a lifetime, these fees can significantly reduce the amount of savings Americans have when they retire.  In October 2007, the Committee held a hearing on the need for 401(k) fees to be disclosed to plan sponsors and participants. Following that hearing, Kohl and Senator Tom Harkin (D-IA) introduced the Defined Contribution Fee Disclosure Act to require 401(k) plan providers to disclose all fees so that workers saving for retirement can make a fully informed decision about which plan is best for them.
 
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Example of TIAA-CREF's TSP rollover ad:   http://www.aging.senate.gov/letters/tiaacrefad.pdf
 
Examples of Fidelity's TSP rollover ads:   http://www.aging.senate.gov/letters/fidelityad.pdf

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