EBSA/SEC to Hold Target-Date Fund Hearing

May 12, 2009 (PLANSPONSOR.com) - The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) and the Securities and Exchange Commission will jointly hold a one-day hearing on June 18, 2009, 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 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-Dates ).

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