Benefits June 17, 2009

Vanguard Sees Continued Explosion in Target-Date Fund Usage

June 17, 2009 (PLANSPONSOR.com) - The Vanguard Center for Retirement Research reported that the use of target-date funds in defined contribution plans administered by Vanguard continues to grow rapidly.
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A Vanguard news release said at the end of 2008, seven in ten such plans offered a target-date fund, and more than one-third of participants opted for them.

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The report notes that three factors were fueling the adoption of target-date funds by plan sponsors and participants:

  • the funds’ simplified approach to investment decisionmaking;
  • the growing use of automatic enrollment within plans; and
  • target-date funds’ designation as a qualified default investment option under the Pension Protection Act of 2006.

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