Remarks as Prepared for Delivery DOL/SEC Target Date Fund Public Hearing, Washington, D.C., June 18, 2009

Deputy Secretary for the Department of Labor Seth Harris

Remarks as Prepared for Delivery
Deputy Secretary for the Department of Labor Seth Harris
DOL/SEC Target Date Fund Public Hearing
Washington, D.C.
Thursday, June 18, 2009

Good morning and welcome. I am Seth Harris, Deputy Secretary for the Department of Labor. On behalf of the Department and Secretary of Labor Hilda Solis, I would like to thank the Securities and Exchange Commission, and in particular Chairman Mary Schapiro and Commissioners Elisse Walter and Troy Paredes, for joining us today to review issues surrounding the use of target date funds by participants in 401(k) plans and by individual investors. I also would like to thank Senator Herb Kohl, Chairman of the Senate Special Committee on Aging, for his interest and the work of his Committee on some of the challenges facing today's investors as they save for retirement.

"Target date" and "lifecycle" funds are designed as simple, long-term investment vehicles for individuals with particular "target" retirement dates in mind. They operate by investing in a diversified mix of investments and automatically shifting that mix away from riskier investments to more conservative investments as the target date approaches. This shift is referred to as a fund's "glide path." These investment funds have become increasingly popular with investors, including participants in 401(k) plans, because of these built-in features. An investor can choose an appropriate target retirement date, and let the fund managers do the rest because investments will automatically become more conservative as the retirement date approaches. Their increasing popularity also is due, in part, to the Department's identification of target date-type funds as appropriate investments for plan sponsors to use when investing 401(k) plan contributions on behalf of participants who fail to provide investment instructions.

Recent concerns have been raised about variation in the glide paths of same-date target date funds offered by different providers, and how this variation may result in plan participants and investors unknowingly placing their retirement assets at risk. We are here today to explore these concerns. We will hear about how target date fund managers make decisions about their funds' glide paths and underlying fund investments, what information is disclosed to plan sponsors, plan participants, and individual investors, and how investors, such as 401(k) plan participants, are using these funds. The public record established as part of today's hearing will help us determine whether regulatory or other guidance would be helpful to alleviate these concerns.

Finally, I want to thank the members of our panel, which includes representatives from both the Department and the Securities and Exchange Commission. I also want to thank in advance the witnesses who will be appearing before us today. We appreciate your willingness to take the time to share your experience and expertise to help the agencies as we explore these issues in the interest of safeguarding investors' retirement savings.

I would now like to welcome and introduce the Chairman of the Securities and Exchange Commission. Mary L. Schapiro was appointed as the 29th Chairman of the U.S. Securities and Exchange Commission by President Barack Obama on January 20, 2009.

Prior to becoming SEC Chairman, she was CEO of the Financial Industry Regulatory Authority (FINRA) — the largest non-governmental regulator for all securities firms doing business with the U.S. public. Chairman Schapiro previously served as a Commissioner of the SEC as well as Chairman of the Commodity Futures Trading Commission.