Life Cycle Funds Likely to Get Boost From Pension Bill

While companies that have employed automatic 401(k) enrollment in the past have tended to herd those investors to guaranteed investment contracts and stable-value, balanced and money-market funds, the Pension Protection Act of 2006 is likely to result in more aggressive choices, MarketWatch reports.

Should President Bush sign the act into law, as he is expected to do so, the Department of Labor is likely to weigh in on what would constitute appropriate default choices, and it undoubtedly will suggest funds that seek to build long-term capital appreciation--most likely life cycle funds, lifestyle funds and separately managed accounts.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.