Pew's research revealed 81percent of small and midsized plan sponsors admitted to not havinga good grasp of fees charged on the plans they sponsored. (Photo:Shutterstock)

When The Pew Charitable Trusts, one of the largest non-profitthink tanks in the country, launched its retirement savings projectin 2014, a primary function of the initiative focused on workplaceretirement plan fees.

Now Pew has launched a lean, online fee-comparison tool intendedto raise awareness among investors and policy makers of the impacthigh fees can have on retirement security.

Awareness of the correlation is in short supply, according toPew's research, which has explored employer andparticipant awareness of investment and administrative fees inretirement plans.

“We need greater awareness of fees and their affect onretirement savings,” said John Scott, director of retirementsavings at Pew, in a webinar rollout of the new online tool.

Research released by the project earlier this year showedone-third of plan participants knew nothing of the fees paid through their workplace retirementplan. Two-thirds of participants had not read fee disclosure forms.And 81 percent of small and mid-sized plan sponsors admitted to nothaving a good grasp of the fees charged on the plans theysponsor.

“We want to make the point that there is a lot of awareness andeducation that needs to go on around retirement accounts,” Scottsaid during the presentation.

Retirement savings calculators are a stapleamong plan service provider platforms. Retail robo-advisors havealso used online tools to underscore the potential savings whenusing passively invested funds over actively managed funds.

But the emergence of a comparative fee tool from a think tankmay represent a threshold-crossing within the larger fee debate.That debate has seen a new body of case law in the past decade,emerged as a focus of the Labor Department and Securities andExchange Commission, and set off a race-to-the-bottom pricing waramong the nation's largest fund managers.

Pew's tool is designed for simplicity. Three scenariooptions—one for the early investor, one for an investor prepping toretire, and a tool that allows an individual to compare their planfees to the calculator's benchmark fees—highlight how fees candrive dramatic difference in retirement outcomes.

In the early investor scenario, two millennials making $60,000 ayear save 7 percent of pay every two weeks. One chooses a fund withan annual return of 6 percent that charges 205 basis points.Another chooses a fund with the same return, but charges just 5basis points.

After 40 years, the lower fee account is worth more than$749,000, while the expensive investment has earned just443,500.

The higher fee fund would have to earn 33 percent more annuallyto make of the savings lost to fees, an unlikely scenario, notedScott.

“The savings in fees can be thought of as several years ofdelaying Social Security claims, or several years of additionalwork,” said Scott.

Young workers are the least likely to be aware of plan fees,Pew's research shows.

“The effect of compounding of fees over time can make a hugedifference for younger workers,” noted Scott, who said educationand awareness initiatives stand to have the most impact on thoseworkers with the most time to save.

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