Two leading consumer groups are lending their support to a
In doing so, the
In a letter to the
Citing data from the ICI, the groups noted that a person who begins investing in a target-date fund at age 30 would have an account twice as big by the time they retire than if they had invested in a stable-value fund.
“It is widely-accepted that, if capital preservation vehicles are included as
qualified default investments, they will be adopted by far too many employers and will attract a disproportionate percentage of retirement assets,” the groups write in their letter. “Why should an employer take
greater litigation risk on a default option such as a life-cycle fund that may lose money in the short-term when it can enjoy a liability safe harbor with a capital preservation investment? Their employees will be worse off, but their litigation exposure will be materially reduced. This is precisely why such a large percentage of plan sponsors have used capital preservation funds as default options.
“In short, including stable value as default options would leave millions of Americans poorer during their retirement years.”