Two key congressional Democrats would like the Government Accountability Office to conduct a review of target-date funds.
Sen. Patty Murray, D-Wash., chairwoman of the Senate Health, Education, Labor and Pensions Committee, and Rep. Robert C. "Bobby" Scott, D-Va., chairman of the House Committee on Education and Labor, said in a letter sent Thursday to the GAO that they're concerned certain aspects of TDFs may be placing retirement savers and retirees at risk.
"TDFs are often billed as 'set it and forget it' investments, yet expenses and risk allocations vary considerably among funds," the lawmakers wrote. "The millions of families who trust their financial futures to target-date funds, need to know these programs are working as advertised and providing the retirement security promised."
Ms. Murray and Mr. Scott outlined 10 items they'd like the GAO to address, including the percentage of total defined contribution plan assets invested in TDFs; the percentage of plan participants that are offered, and participate in, TDFs; and the percentage of plan participants defaulted into TDFs.
Also, the lawmakers want to know how often investors with default investment TDFs in their DC plans reassess their investments. And to what extent do TDFs include alternative assets, such as hedge funds or private equity?
The GAO was also asked to weigh in on the "possible legislative or regulatory options that would not only bolster the protection of plan participants, who are nearing retirement or are retired, but also achieve the intended goals of TDFs."
In February 2019, Ms. Murray and Mr. Scott asked the GAO to examine retirement plan cybersecurity and in March of this year, the GAO issued a report and recommendations for the Department of Labor.