<nobr>Jul 17, 2009</nobr>

ERIC Says No Need for Additional ERISA Regulations Aimed at Target Date Funds

Washington, D.C. -- In comments submitted today to the Department of Labor and the Securities and Exchange Commission in connection with a joint hearing regarding target date funds, The ERISA Industry Committee (ERIC) said there is no need for additional regulations or guidance under the Employee Retirement Income Security Act (ERISA) aimed at target date funds.

Under ERISA, fiduciaries of participant-directed plans may make available to plan participants a range of investment alternatives but they are not responsible for selecting a target date fund or any other investment alternative that is appropriate for every single participant. Rather, if a fiduciary elects to offer a target date fund, the selection of a specific target date fund as an investment alternative reflects the fiduciary's judgment that the selected fund is suitable for a hypothetical plan participant.

ERIC's comments stressed that the "variety of approaches taken by target date funds, including the variation in investment allocations and glide paths among target date funds with the same target year, is entirely consistent with ERISA's fiduciary standards."

Moreover, "target date funds are not, and are not designed to be, a 'one-size-fits-all' investment solution for every participant. To the contrary, target date funds are designed to meet the assumed needs of hypothetical plan participants, based on their target retirement years."

ERIC President Mark Ugoretz said that, "[a]lthough a participant can reduce some risks by diversifying the allocation of his or her account balance and by periodically reviewing and revising the allocation, there is no investment or investment strategy that can completely protect a participant from risk."

Ugoretz noted that "many ERIC members spend considerable time and treasure to improve their plan communications and to encourage participants to attend to the allocation of their account balances."

ERIC concludes by saying that, "[e]xisting DOL and SEC regulations appropriately balance the fiduciary's responsibility for selecting a broad range of investment alternatives, and for ensuring that participants have access to material information about the plan's investment alternatives, with the participant's responsibility for making investment decisions. If the DOL or the SEC nevertheless determines that additional guidance is required, the new guidance should not disrupt the balance struck by existing law."

A copy of the comment letter is below.

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For more information:
Ted Godbout
Manager, Communications
The ERISA Industry Committee
1400 L Street, NW, Suite 350
Washington, DC 20005
Phone: (202) 789-1400
Fax: (202) 789-1120
tgodbout@eric.org
www.eric.org

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The ERISA Industry Committee (ERIC) is a non-profit association committed to representing the advancement of the employee retirement, health, and compensation plans of America's largest employers. ERIC's members provide benchmark retirement, health care coverage, compensation, and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

Text Files:

ERIC Comment Letter on Target Date Funds

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