EBSA News Release: [10/28/2009]
Contact Name: Gloria Della or Joseph De Wolk
Phone Number: (202) 693-8664 or x4676
Release Number: 09-1325-NAT
US Department of Labor official testifies before Senate aging committee on 401(k)-type plans
WASHINGTON 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
- 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/.