On June 9, 2014, the NAPA Government Affairs Committee submitted a comment letter to the SEC in response to its request for comments regarding a proposed rulemaking on target date fund disclosures. In addition to supporting the SEC’s continued use of asset-based glide path illustrations (instead of changing to risk-based illustrations), the NAPA GAC recommended that the SEC require the following disclosures be made to retirement plan participants in relation to target date funds:
• Target date funds are not guaranteed investment options.
• A stated target retirement year is not a guarantee that a target date fund investor will achieve a successful retirement by that date.
• Target date funds are intended to be utilized as the sole investment option for its investors.
• Target date fund manufacturers and managers make a number of informed assumptions when constructing their target date fund portfolio, and their assumptions for the “average” target date fund investor may or may not reflect their own circumstances.
In response to the SEC reopening its comment period, the Department of Labor has reopened the comment period on its proposed regulatory changes regarding target date fund disclosures. The NAPA GAC intends to submit comments to the DOL by the July 3, 2014 deadline.
Ronald J. Triche is NAPA’s Associate General Counsel and Director of Government Affairs.
