John Hancock Retirement Plan Services announced Tuesday that it is offering eight target-date funds and one retirement income fund to 401(k) investors.
The eight lifecycle funds have target dates in five-year increments ranging from 2010 to 2045. The Retirement Portfolio aims to deliver retirement income 6% above inflation, before expenses, by investing half of the portfolio in equities and half in fixed income.
The company expects plan sponsors and participants to embrace the new funds enthusiastically since half of the $40 billion John Hancock manages in 401(k) assets is in their lifestyle funds, noted Edward Eng, senior vice president, product development.
“We offer participants simplicity and provide plan sponsors with convenient investment options that work for their participants,” Eng added. “This new option makes it even easier for participants.”
As to why John Hancock decided to offer target date funds now, when its lifestyle funds have been available for 10 years, Eng noted that the Pension Protection Act advocates such choices for 401(k) investors.
The company will be promoting its new funds through a marketing and advertising campaign aimed at sponsors and financial advisors. While the target-date funds will initially be available only on retirement platforms, John Hancock will eventually make the funds available through other channels, Eng said.