Not a Member? Get access to HR news and resources that you can trust.
Here is how HR can help prevent the missteps that could cost your company big in court.
Is your employee handbook ready for the changing world of work? With SHRM’s Employee Handbook Builder get peace of mind that your handbook is up-to-date.
60+ new SHRM Seminar dates in 10 U.S. cities and virtually.
Expand your influence and learn how to become an effective leader -- Join us in Phoenix, AZ, October 2-4, 2017.
Only 16 percent of U.S. consumers said they were familiar with target-date funds (TDFs) as an investment option in 401(k) and other defined contribution retirement plans, despite the growing use of these funds as automatic default options in plan accounts, according to a 2012 survey by LIMRA, an insurance industry research firm.
“In 2007, the Department of Labor included TDFs as one of the three qualified default investment alternatives, resulting in tremendous growth of target-date fund assets, which reached $466 billion in the third quarter 2012,” said Cecilia Shiner, senior analyst at LIMRA Retirement Research. “Despite the enormous popularity of TDFs, few consumers understand them, and a majority were unaware if TDFs are available in their employer-sponsored retirement plans.”
Fewer women were likely to say they were familiar with TDFs than men (10 percent vs. 22 percent), LIMRA found. Consumers under 50 and those with household incomes of $100,000 or more were the most likely to be familiar with TDFs (20 percent and 30 percent, respectively).
While more than half of consumers understood that TDFs provide a diversified mix of stocks and bonds and that they become more conservative over time (that is, bonds become a larger portion of the fund’s assets), one in 10 consumers believed that TDFs included guarantees, become risk free at retirement or require income to be withdrawn in the target year—none of which is a typical feature of these funds (see
Test Your Knowledge on TDFs).
The findings are based on 3,531 consumers involved in household financial decision-making. The survey was fielded in May 2012.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Related SHRM Articles
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Don’t Lose Sight! What Does Poor Preventive Care Cost Your Business?
CA Resources at Your Fingertips
SHRM’s HR Vendor Directory contains over 3,200 companies