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Employee Benefits Security Administration

News Release

Release Date: May 6, 2010
Release Number: 10-640-NAT
Contact Name: Gloria Della or Joseph De Wolk
Phone Number: 202.693.8664/202.693.4676

U.S. Labor Department and SEC issue guidance on target date funds

Washington — The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) and the U.S. Securities and Exchange Commission (SEC) today announced guidance to help investors and plan participants better understand the operations and risks of target date fund investments.

Target date funds, also known as life cycle funds, are designed to provide a convenient way to invest for retirement by automatically changing their mix of investments in a way that is intended to become more conservative as the fund’s target date approaches. There can be significant differences among target date funds in how they invest and how they reallocate assets between equity and fixed income investments up to and after the target date of the fund. The guidance will assist investors and participants in assessing the benefits and risks associated with target date funds and the appropriateness of including such an investment as part of their retirement portfolios.

The guidance describes some basics features of target date funds, including the investment mix of such funds, the risks associated with the investments, how target date funds operate, and ways to evaluate a target date retirement fund that will help increase awareness of both the value and risks associated with these types of investments.

“Investor Bulletin: Target Date Retirement Plans” is available on EBSA’s Web site at www.dol.gov/ebsa or the SEC Web site at www.sec.gov. The bulletin also provides a list of additional resources to educate participants and other investors about retirement plans and mutual funds.

U.S. Department of Labor news releases are accessible on the Department's Newsroom page. The information in this news release will be made available in alternate format (large print, Braille, audio tape or disc) from the COAST office upon request. Please specify which news release when placing your request at 202.693.7828 or TTY 202.693.7755. The Labor Department is committed to providing America's employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit the Department's Compliance Assistance page.