Noting that because fees in 401(k) plans are hidden from investors they can be unfairly high—between 3% and 5%—a senior Capitol Hill legislator called for better transparency on Tuesday, Reuters reports.

Even one percentage point can reduce the gains in a 401(k) plan by as much as 20%, said Rep. George Miller (D-Calif.), chairman of the House of Representatives Education and Labor Committee.

“Even a seemingly small difference in the fees that workers pay can make an enormous difference in the overall size of their 401(k) account balance,” Miller said. “Today, because of weak disclosure rules, most workers don’t even know how much they are paying in fees.”

Miller’s committee is focusing on 401(k) fees and is widely expected to introduce legislation.

In November, the Government Accountability Office recommended such legislation, saying the Labor Department should oversee it. The GAO noted that the Employee Retirement Income Security Act requires very little, piecemeal disclosure of fees. In fact, in July, the Labor Department proposed changes to an annual reporting form make fees more evident to investors. But the Labor Department doesn’t want to stop there.

“We are currently working on several initiatives focused on improving the transparency of fee and expense information,” said Bradford Campbell, acting assistant secretary of the Labor Department’s Employee Benefits Security Administration. “We hope to publish a final regulation in the next several months.”

Matthew Hutcheson, an independent pension fiduciary, testified that 401(k) plan fees should average 1.5% but are typically between 3% and 5%. “That is 1.5% to 3.5% more than is reasonably necessary,” Hutcheson said.

With $2 trillion invested in 401(k) plans, an average excess 1.5% in fees translates to an extra $3 billion that fund companies are collecting every year. On the high end of an average of 3.5% in excess fees, that translates to an extra $7 billion.

All 401(k)s charge fund management fees, but many also include recordkeeping, audit, legal, trustee and consulting fees.

“Fees charged to participants may be stated in the investment materials,” Stephen Butler, president of Pension Dynamics, testified, “but they remain effectively hidden on an ongoing basis because participants never receive a bill.”

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