EBSA/SEC to Hold Target-Date Hearing

The Department of Labor (DoL) and the Securities and Exchange Commission (SEC) are looking into target-date funds.

The DoL’s Employee Benefits Security Administration (EBSA) and the SEC will jointly hold a one-day hearing on June 18 to explore issues relating to target-date funds and other similar investment options.

“As target date funds and similar investment options become increasingly popular, it is important that all investors, including 401(k) plan sponsors and participants, can adequately evaluate these investment options and safeguard their interests,” the EBSA said on its Web site. According to the agency, the hearing will focus generally on issues facing investors in these types of products, and will explore topics such as portfolio composition, risk, and disclosure.

The agencies say they anticipate that witnesses will include representatives of plan participants and beneficiaries, plan sponsors, investor organizations, academia, and the financial services industry.

The hearing will be held at the U.S. Department of Labor, 200 Constitution Ave., NW, Washington, D.C. Details concerning the hearing will be announced within the next few weeks.

After a hearing in February, the U.S. Senate Special Committee on Aging noted that the DoL has issued regulations allowing target-date funds to be used as a qualified default investment alternative (QDIA) in employer-sponsored retirement plans, but there are no requirements regarding the composition of target-date funds and the appropriate ratio of stocks and bonds as the fund nears its target (see “Senate Committee Takes Aim at Target-Date Funds’).

Committee Chairman Senator Herb Kohl (D-Wisconsin), sent letters to U.S. Secretary of Labor Hilda Solis and SEC Chair Mary Schapiro, “urging them to immediately commence a review of target-date funds and begin work on regulations to protect plan participants.”

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