Lifetime income and target date funds are taking center stage this spring, while a proposed Department of Labor regulation freshening up the term ‘fiduciary’ is likely on tap for this fall.
Senator Herb Kohl (D-Wisconsin), chairman of the Senate’s Special Committee on Aging, plans to hold a hearing June 16 on the topic of lifetime income, while the Department of Labor’s Employee Benefits Security Administration (EBSA) continues to sift through the 700 comment letters that it received regarding its request for information (RFI) on how best to integrate lifetime annuities and other income-generating options into 401(k)s and other employer-sponsored retirement plans.
In the first of a three-pronged initiative on target date funds, the EBSA and the Securities and Exchange Commission (SEC) released its long-awaited guidance on May 6 to help investors and plan participants better understand the operations and risks of target date funds.
Phyllis Borzi, assistant secretary of Labor for EBSA, said in remarks about the newly released guidance at the Investment Company Institute’s (ICI) general membership meeting in Washington on May 7, that “most [plan participants], and even the plan sponsors, maybe didn’t fully understand how widely these [target date] funds vary in their structure. So it became quite clear to [DOL and SEC] that we needed to do something to help people better understand.”
EBSA says the guidance describes some basic features of target date funds, including the investment mix of such funds, the risks associated with the investments, how target date funds operate, and ways to evaluate a target date retirement fund that will help increase awareness of both the value and risks associated with these types of investments. The guidance is called “Investor Bulletin: Target Date Retirement Plans,” and is available on EBSA’s Web site at www.dol.gov/ebsa and the SEC’s Web site at www.sec.gov.
Best Practices for Fiduciaries