A growing number of pension plan administrators are giving Fidelity Investments the boot before the mutual fund giant imposes a new mandate requiring 401(k) providers to enforce short-term redemption fees on an even-handed basis, InvestNews reports. Pension plan recordkeepers are balking at new provision, which is scheduled to take effect on Dec. 31, because the burden of tracking short-term redemption fees creates new administrative headaches and Fidelity has declined to offer additional technical support. Short-term redemptions are especially difficult to track on a participant basis in omnibus accounts. A compliance officer at Barclays Global Investors said last month that Fidelity isolated itself by raising the bar on administrative guidelines involving redemption policies.
Nonetheless, Fidelity is standing by its decision because it believes an organized strategy for combating market-timing activities within 401(k) plans is needed to protect the interests of long-term shareholders. A senior official at T. Rowe Price predicted the mutual fund industry will follow Fidelity's' example but said that other companies have not yet stepped up to the plate.