SEC Seeks Comment on Target Date Retirement Funds

Jack Humphrey, Regulatory journalist
April 04, 2012 /

The US Securities and Exchange Commission tis seeking comment on the results of investor testing regarding target date retirement funds.

The SEC will consider the comments before acting on a proposal it issued in 2010 intended to enhance the information provided to individuals investing in such funds.

That proposed rule would generally require target date retirement funds to more prominently disclose the fund’s asset allocation at the target date. Under the proposal, the disclosure would have to be placed adjacent to the fund’s name the first time the name appears in marketing materials.

The proposal also would require marketing materials for target date retirement funds to include a table, chart, or graph depicting the fund’s asset allocation over time.

In the SEC-sponsored survey, investors were asked questions after reviewing documents containing information about a hypothetical target date retirement fund. The documents included versions revised to reflect the changes proposed by the SEC.

Target date retirement funds are designed to make investing for retirement more convenient by automatically changing the fund’s allocation among asset classes, such as stocks, bonds, and cash, over time. Such funds typically become more conservative as the retirement date nears, and sometimes continue becoming more conservative for a number of years after retirement.

The proposal is available on the SEC’s website. To ensure the public has a chance to comment, the SEC has reopened the comment period. Comments on the proposal are due 45 days after publication in the Federal Register.


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