KOHL RELEASES GAO REPORT ON 401(k) AUTO-ENROLLMENT
Aging Chairman to Hold Target Date Fund Hearing on Wednesday
WASHINGTON, D.C. - Today U.S. Senator Herb Kohl (D-WI), chairman of the Senate Special Committee on Aging, released a report by the U.S. Government Accountability Office (GAO) examining the effect automatic enrollment has on 401(k) participation and retirement savings. GAO found that automatic enrollment policies, which were instituted as part of the Pension Protection Act of 2006, appear to increase participation in 401(k) plans significantly, though they may not be suitable for all plan sponsors, such as those with a high rate of workforce turnover. The report also considered the benefits and limitations of proposals to institute automatic IRAs and other state-sponsored retirement savings accounts for Americans who lack access to an employer-sponsored plan. GAO raised questions about how such a proposal could be implemented to effectively help low-income workers, who are most likely to need assistance in saving for a secure retirement.
"Just like target date funds, the auto-IRA is a very promising concept that could help millions of Americans save for retirement. But with both of these products, the devil is in the details, and we need to make sure that they are implemented correctly," said Kohl.
The GAO report also made mention of the widespread adoption of target date funds as the default investment for plans with automatic enrollment. On Wednesday, Senator Kohl will hold an Aging Committee hearing on strengthening the 401(k) system, with a particular focus on the proliferation, composition, and regulation of target date funds. This hearing expands the probe into target date funds first undertaken by the Aging Committee as part of its February hearing.
WHAT: Special Committee on Aging Hearing
Default Nation: Are 401(k) Target Date Funds Missing the Mark?
WHEN: Wednesday, October 28, 2009 at 2:00 p.m.
WHERE: 562 Dirksen Senate Office Building
WHO: Barbara Bovbjerg, Director of Education, Workforce and Income Security, U.S. Government Accountability Office
Andrew Donahue, Director of Investment Management,United States Securities and Exchange Commission
The Honorable Phyllis C. Borzi, Assistant Secretary of Labor, Employee Benefits Security Administration, U.S. Department of Labor
John Rekenthaler, CFA, Vice President of Research, Morningstar
Ralph Derbyshire, General Counsel, Personal and Workplace Investing, Fidelity
Michael Case Smith, Senior Vice President, Institutional Strategies, Avatar Associates
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