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Survey Reveals Plan Sponsor Confusion Causing Broad Gap between Utilization and Understanding of Target Date Funds

Posted by on Nov 17, 2010 in Investments, Retirement | 0 comments

DENVER–(BUSINESS WIRE)– A new survey conducted by Janus Capital Group (NYSE:JNSNews) found that defined contribution (DC) plan sponsors are unaware or unsure about many key aspects of target date funds, despite the fact more plans are offering such options than ever before. The survey, which has been conducted annually for four years and focuses on DC plan sponsors’ qualified default investment alternative (QDIA) fund selection, construction, monitoring and satisfaction, revealed a broad gap between plans’ utilization and understanding of target date funds.

Despite the increasing number of DC plans offering target date funds, the survey revealed a significant percentage of sponsors are still unclear about many aspects of the target date funds within their investment menus. For instance:

  • Compared to 2009 findings, more plans don’t know what the end date of the glide path is in their target date funds (50% compared to 32% last year);
  • More than one-third of all plans are not familiar with the “to” or “through” glide path dilemma; and
  • 35% of plans (compared to 29% last year) are not sure what the best QDIA option is for their employee population.

“Given the industry-wide scrutiny on target date funds, we were surprised at the amount of uncertainty the survey data revealed,” said Russ Shipman, senior vice president and managing director of Janus’ Retirement Strategy Group. “The findings reveal a disconnect as respondents believe they’re less than well informed about their chosen target date offerings, but remain confident their employees understand the products and use them correctly. This confirms an opportunity exists to provide plan sponsors with education about the structures and mechanics of target date funds. As a firm, we understand the stakes are high for end-user plan participants so we endeavor to be part of that discussion and solution with our clients and their plan sponsors.” READ MORE

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