WASHINGTON, Oct. 28 /PRNewswire-USNewswire/ -- Phyllis C. Borzi, assistant secretary of labor for the U.S. Department of Labor's Employee Benefits Security Administration (EBSA), today testified before the Senate Special Committee on Aging on the use of target date funds as investment options for 401(k)-type plans. An estimated 75 percent of 401(k) plans offer so-called life cycle or target date funds as investment options for retirement plans.
"The retirement security of American workers increasingly depends on their investment decisions. The department is reviewing issues on the use of target date funds and exploring a number of regulatory initiatives to assist plan fiduciaries, participants and beneficiaries in understanding target date funds," said Borzi.
In her testimony, Borzi discussed:
-- The growth of target date funds as an investment option for 401(k)
plans, which have grown from $18 billion in 2000 to $87 billion in 2005.
-- Target date funds as part of the department's default investment
alternative regulation. The final rule was implemented as part of the
Pension Protection Act of 2006 provisions to encourage automatic
enrollment in defined contribution plans such as 401(k) plans.
-- The downward returns experienced by target date funds during the
economic downturn that began in 2008.
-- The Labor Department's oversight, regulatory, enforcement and outreach
roles relating to plan investments.
-- Departmental initiatives to help participants and beneficiaries
understand the benefits, risks and costs of plan investment options such
as target date funds.
The full text of today's testimony is available on the Labor Department's Web site at http://www.dol.gov/ebsa.
U.S. Department of Labor
CONTACT: Gloria Della, +1-202-693-8664, or Joseph De Wolk,+1-202-693-4676, both of the U.S. Department of Labor
