Key Democrats ask GAO to review TDF
Two key Congressional Democrats would like the Government Accountability Office to do a target date funds review.
Senator Patty Murray, D-Wash., Chairman of the Senate Committee on Health, Education, Work and Pensions, and Representative Robert C. “Bobby” Scott, D-Va., Chairman of the Committee on House on Education and Work, said in a letter sent GAO on Thursday that they are concerned that some aspects of TDF could put savers and retirees at risk.
“TDFs are often billed as ‘set it and forget it’ investments, but the expenses and risk allocation vary widely from fund to fund,” the lawmakers wrote. “The millions of families who entrust their financial futures to fixed-term funds need to know that these programs are working as advertised and providing the retirement security they promise.
Ms. Murray and Mr. Scott presented 10 things they would like GAO to address, including the percentage of total defined contribution plan assets invested in TFFs; the percentage of plan members who are offered and participate in FDD; and the percentage of plan members who defaulted on FTDs.
In addition, lawmakers want to know how often investors with default investment TDFs in their DC plans re-evaluate 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 “possible legislative or regulatory options that would not only strengthen the protection of plan members, who are nearing retirement or are retired, but also achieve the intended objectives of the FDD.”
In February 2019, Ms. Murray and Mr. Scott asked the GAO to review the cybersecurity of pension plans, and in March of this year, the GAO released a report and recommendations for the Department of Labor.