The Securities and Exchanges Commission (SEC) just took a step back towards making new regulations governing target date funds. The regulatory agency wants feedback on the conclusions drawn from investor research on target date funds. Comments are due within 45 days [comment form].

A spokeswoman for the SEC told MFWire.com that the comment period is shorter than the standard 90 days because this is the second round of comments.

The survey asked investors questions on documents outlining a theoretical target date retirement fund.

The SEC introduced the initial proposal back in 2010 [see our sister publication, The 401kWire]. That reg would require target date funds to include their planned asset allocation at their target in the fund name, and it would require the inclusion of a graphical glide path representation inside the prospectus and marketing materials.

A detailed description of the proposal can be accessed via the SEC's website.

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Press Release

SEC SEEKS COMMENT ON INVESTOR TESTING REGARDING TARGET DATE RETIREMENT FUNDS

Washington, D.C., April 3, 2012 –The Securities and Exchange Commission today said it is seeking comment on the results of investor testing regarding target date retirement funds. The Commission will consider the comments before acting on a proposal it issued in 2010 intended to enhance the information provided to individuals investing in such funds.

The proposed rule would generally require target date retirement funds to more prominently disclose the fund’s asset allocation at the target date. Under the proposal, the disclosure would have to be placed adjacent to the fund’s name the first time the name appears in marketing materials. The proposal also would require marketing materials for target date retirement funds to include a table, chart, or graph depicting the fund’s asset allocation over time.

In the SEC-sponsored survey, investors were asked questions after reviewing documents containing information about a hypothetical target date retirement fund. The documents included versions revised to reflect the changes proposed by the Commission.

Target date retirement funds are designed to make investing for retirement more convenient by automatically changing the fund’s allocation among asset classes, such as stocks, bonds, and cash, over time. Such funds typically become more conservative as the retirement date nears, and sometimes continue becoming more conservative for a number of years after retirement.

The proposal is available on the Commission’s website. To ensure the public has a chance to comment, the Commission has reopened the comment period. Comments on the proposal are due 45 days after publication in the Federal Register. 

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