July 9, 2012

Office of Regulations and Interpretations

Employee Benefits Security Administration

U.S. Department of Labor

200 Constitution Avenue NW

Room N-5655

Washington, DC 20210

Submitted to: e-ORI@dol.gov

Re: Target Date Disclosure

RIN1210-AB38

Ladies and Gentlemen:

AARP appreciates the opportunity to comment in response to the Department of Labor’s

(Department) request for comments on the proposed regulatory amendments relating to 

enhanced disclosure concerning target date or similar investments (TDFs).

1 AARP 

recognizes that the use of TDFs by investors has grown significantly, even since the 

Department’s 2010 request for comments on the topic, and that TDFs may in the future 

comprise a substantial repository for retirement investments. 

The primary purpose of this letter is to assert a continued adherence to the positions 

stated in AARP’s January, 2011 letter pertaining to Qualified Default Investment 

Alternatives (QDIAs). AARP views this as an opportunity to also express views on more 

recent developments on the subject. In particular, AARP notes the Securities and 

Exchange Commission initiative as to the Siegel & Gale study, Investor Testing of Target 

Date Retirement Fund (TDF) Comprehension and Communications.

2 We have also 

reviewed many of the comments of other interested parties who believe the Siegel & Gale 

Study should influence the Department’s current thinking about TDF required disclosures.

 1 AARP represents persons age 50 or older, and helps them gain independence, choice and control in ways 

that are beneficial and affordable to them and to society. Almost one-third of AARP’s members are working.

AARP fosters the economic security of individuals as they age by seeking to increase the availability, 

security, equity, and adequacy of retirement, health, disability, and other employee benefits. AARP also 

devotes a considerable amount of work to protecting consumers and investors from exploitation in the 

marketplace, including by advocating for strong and effective state consumer protections and federal investor 

protections. 2

 http://www.sec.gov/comments/s7-12-10/s71210-58.pdf. 
Office of Regulations and Interpretations

July 9, 2012

Page 2

AARP’s review of the Siegel & Gale study determined that the study’s basic conclusions 

may be simply stated: there is considerable lack of understanding of the fundamental

properties (and hence riskiness) of a TDF, not only among non-TDF holders, but among 

TDF investors themselves. This conclusion is not weakened by the findings that the 

provision of information increases investors’ understanding to some degree; and that older 

investors are savvier than younger ones. 

The survey results are essentially unremarkable and reinforce the view that there is a real 

lack of understanding about the significance of the target date specified by a TDF fund. 

Investors tend to assume that asset allocation is frozen at that point, even if they were less 

likely to do so after being given additional information on the glide path. In addition, half of 

TDF holders believe that the TDF provides guaranteed income in retirement -- a serious 

misconception. Investors also failed to appreciate the ways in which TDFs with the same 

target date could differ, and more than half could not infer the percentage decline that 

would take place in equity holdings by the target date (that is, they could either not read a 

graph or perform such a calculation).

The lack of understanding of the way TDFs work and their riskiness is of significant 

concern to AARP. These instruments represent a growing share of retirement 

investments, and AARP believes that trend may continue in the future, given the number 

of plans with TDFs as an option and the number of plans for which a TDF is the default. 

Therefore AARP is committed to the proposition that remedies must be found for investors’ 

lack of understanding of the risks they incur when they invest in a TDF. AARP urges the 

Department to stand by its proposed regulatory amendments and to continue to devote 

efforts to expand investor understanding and literacy to include the economic, financial and 

regulatory aspects of TDFs.

AARP appreciates the opportunity to provide its views on the proposed amendment of 

rules relating to Target Date Funds. If you have any questions, please do not hesitate to 

contact Tom Nicholls at 202.434.3765 or Jay Sushelsky at 202.434.2151.

Sincerely,

David Certner

Legislative Counsel & Legislative Policy Director

cc: Joe Canary

Director, Office of Regulations and Interpretations

Jeffrey Turner 

Deputy Director, Office of Regulations and Interpretations