The Department of Labor announced that beginning in August, it will require asset management firms to provide further information on the risks and benefits of investing in target-date funds, including details on their glidepaths, to employers and employees.
Together with the Securities and Exchange Commission, DOL’s Employee Benefits Security Administration will provide a checklist of information that must be provided.
These details will “ensure that plan participants are provided with comprehensive information to evaluate target-date or similar funds that have been selected as their plan’s default investment,” the Labor Department said.
Senate Special Committee on Aging Chairman Herb Kohl (D-Wisc.), who held hearings on the downfalls of target-date funds following their dismal performance in 2008, applauded the guidance.
“Given that so many Americans are defaulted into target-date funds, I am heartened that both DOL and the SEC are continuing to make oversight of these funds a priority,” Kohl said. “These new regulations are a great first step in helping employers make vital decisions about how their employees’ 401(k) savings should be invested.
“However, more clarity and heightened protections for target-date investors are needed,” Kohl continued, “and I will continue to work to address these issues.”
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access