Securities and Exchange Commission
June 9, 2014
Page 3

individual investors most likely to invest in TDFs to plan sponsors and savvy retirement plan
consultants.

That is, the goal should be the creation of a tiered or layered risk disclosure regime. The
basic information provided should include an illustration of the effect of inflation so that all users
understand its impact on the real value of their assets. More detailed information, beyond the
basic glide path illustration, should be available for more sophisticated users.

As to the timing of risk disclosures, they should be included in all marketing materials
and the TDF prospectus. Furthermore, participants and individual investors should receive
notice of the TDF’s new, presumably decreased, risk as the portfolio shifts over time.

The AFL-CIO appreciates the opportunity to comment on the Proposed Rule, and we
would be happy to provide any additional information or assistance as the Commission develops

the final rule.

Sincerely yours,

/s/ Karin S. Feldman
Karin S. Feldman
Benefits and Social Insurance Policy Specialist


Securities and Exchange Commission
June 9, 2014
Page 2

Pensions and retirement savings plans are a significant component of the economic
package that our affiliates negotiate through collective bargaining with employers. As is the case
for most middle-class Americans, union members’ retirement money is their biggest investment
in the capital markets, and, likely their most important financial asset. While a large majority of
union-represented workers have guaranteed pensions, they also participate in, and rely on,
defined contribution plans, typically 401(k) plans. Indeed, a greater share of private-sector
unionized workers participate in defined contribution plans than do their non-union
counterparts.”

Because they are now a qualified default investment alternative under ERISA, TDFs are
attractive to retirement plan fiduciaries seeking to minimize potential fiduciary liability. They
are a fast-growing 401(k) plan investment option, and we have every reason to believe their use
will only increase. Given the increasing importance of TDFs, and also because they tend to
attract less experienced and less engaged investors, we believe ensuring that plan participants,
and retail investors, as well as TDF intermediaries, like retirement plan consultants and plan
sponsors, are provided with an appropriate amount of clear information about the potential risks,
benefits, and fees associated with these funds should be a Commission priority. We urge the
Commission to take up the issues covered by all five of the IAC recommendations.

We strongly agree with the [AC’s finding that the asset allocation of a TDF is an
unreliable proxy for risk, providing insufficient information to evaluate a fund adequately, and,
thus, urge the Commission to adopt the Committee’s recommendation that any asset allocation
illustration at least be paired with, if not replaced by, a glide path illustration based on a
standardized measure of fund risk. Further, the risk assessment must be consistent across TDFs,
i.e. based on a standard methodology, so as to enable easy comparison across TDFs and TDF
providers.

As to the particular form — whether it be text, table, chart, and/or graph — of the glide path
illustration, we urge the Commission to build on, and look to, its August 2012 study which
concluded that many U.S. retail investors lack basic financial literacy and included
recommendations to improve the timing, content and format of financial disclosures. In order to
determine how best to present an easily understood and concise, yet comprehensive, glide path
illustration of fund risk, the Commission should conduct focus groups and other appropriate
empirical research. The focus groups and other research should reflect the range of users who
will be relying on the new risk disclosure — from less experienced plan participants and

2 Bureau of Labor Statistics, National Compensation Survey: Employee Benefits in the United States, March
2013, Retirement Benefits, Table 2 available at
http://www.bls.gov/nes/ebs/benefits/2013/ownership/private/table02a.pdf.

3 ‘The regulations promulgated pursuant to Section 404(c)(5) of ERISA provide for several categories of
“qualified default investment alternatives,” including TDFs. 29 CFR §2550.404(c)-5(e)(4).


EXECUTIVE COUNCIL

American Federation of Labor and Congress of Industrial Organizations

815 Sixteenth Street, N.W RICHARD L, TRUMKA ELIZABETH H. SHULER TEFERE GEBRE

Washington, D.C. 20006 PRESIDENT SECRETARY-TREASURER, EXECUTIVE VICE PRESIDENT

(202) 637-5000

www.aticio.org Michael Sacco Michael Goodwin Robert A. Scardelletti R. Thomas Buffenbarger
Harold Schaitberger Edwin D. Hill Clyde Rivers Cecil Roberts
Leo W. Gerard Witiam Hite Larry Cohen Gregory J. Junemann
Nancy Wohiforth Rose Ann DeMoro Fred Redmond Matthew Loeb
Randi Weingarten Rogelio “Roy” A. Flores Fredric V. Rolando: Diann Woodard
Patrick D. Finley Newton B. Jones D. Michael Langford Baldemar Velasquez
Ken Howard James Boland Bruce R. Smith Bob King
General Holiefietd Lee A. Saunders James Andrews Maria Elena Durazo
Terry O'Sullivan Veda Shook Walter W. Wise Lawrence J. Hanley
Lorretta Johnson Capt. Lee Moak Joseph J. Nigro James Callahan
DeMaurice Smith Sean McGarvey Laura Reyes J. David Cox
David Durkee D. Taylor Kenneth Rigmaiden Stuart Appelbaum
Joseph T. Hansen Harold Daggett Bhairavi Desai James Grogan
Paul Rinaldi Mark Dimondstein Harry Lombardo

Submitted by Email to e-ORI@dol.gov

July 1, 2014

Office of Regulations and Interpretations
Employee Benefits Security Administration
Room N-5655

US Department of Labor

200 Constitution Avenue, NW
Washington, DC 20210

Attention: RIN 1210-AB38; Target Date Disclosure

Re: Target Date Disclosure
Docket ID: EBSA-2010-0053-0003

Ladies and Gentlemen:

On June 3, 2014, the Department of Labor (“Department”) reopened the comment period
on its proposed regulatory amendments related to enhanced disclosure for target date or similar
funds.' As explained in the preamble, the reopening of the comment period is part of the
Department’s continued coordination of its work on target date funds with the Securities and

Exchange Commission (“Commission”).

The comments submitted to the Commission by the American Federation of Labor and
Congress of Industrial Organizations (“AFL-CIO”) and its 56 affiliated unions are enclosed.
These comments, submitted in response to the Commission’s reopening of its public comment
period, addressed the recommendations of the Commission’s Investor Advisory Committee on

target date mutual fund disclosure.

1

The proposed rule was published in the Federal Register at 79 Fed. Reg. 31893 and is available at

http://www.gpo.gov/fdsys/pkg/FR-2014-06-03/pdf/2014-12667.pdf



Employee Benefits Security Administration
July 1, 2014
Page 2

The AFL-CIO is sending this copy of its comments so the Department may consider them
as it finalizes its rule on enhanced disclosure for target date or similar funds.
We appreciate the opportunity to provide comments and would be happy to provide
additional information or assistance to the Department as it develops the final rule.
Sincerely,
/s/ Karin S. Feldman

Karin S. Feldman
Benefits & Social Insurance Policy Specialist


American Federation of Labor and Congress of Industrial Organizations

EXECUTIVE COUNCIL
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xs “é— Washington, 0.C. 20006 PRESIDENT SECRETARY-TREASURER EXECUTIVE VICE PRESIDENT
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AFL Gy Harold Schaitberger Edwin D. Hill Clyde Rivers Cecil Roberts
g Pig Leo W. Gerard William Hite Larry Cohen Gregory J. Junemann
on & Nancy Wohiforth Rose Ann DeMoro Fred Reamond Matthew Loeb
oe we Randi Weingarten Rogelio “Rey” A Flores Fredric V. Rolando Diann Woodard
Oy Patrick D. Finley Newton B. Jones D. Michael Langford Baldemar Velasquez
fousTRIAL Ken Howard James Boland Bruce A. Smith Bob King
Genera Holiefieid Lee A. Saunders James Andrews Maria Elena Durazo
Terry O'Sullivan Veda Shook Walter W. Wise Lawrence J. Hanley
Lorretta Jonson Capt. Lee Moak Joseph J. Nigro James Catlahan
DeMaurice Smith Sean McGarvey Laura Reyes J. David Cox
David Durkee D. Taylor Kenneth Rigmaiden Stuart Appelbaurn
Joseph T. Hansen Harold Daggett Bhairavi Desai James Grogan
Paul Rinaldi Mark Dimondstein Harry Lombardo

Submitted by Email to rule-comments@sec.gov

June 9, 2014

Secretary

Securities and Exchange Commission
100 F Street, NE

Washington, DC 20549-1090

Re: — Request for Additional Comment on Investment Company Advertising:
Target Date Retirement Fund Names and Marketing
File No. S7-12-10
RIN: 3235-AK50

Ladies and Gentlemen:

The American Federation of Labor and Congress of Industrial Organizations (“AFL-
CIO”), on its behalf and on behalf of its 56 affiliated unions, submits these comments in response
to the request for additional comment issued by the Securities and Exchange Commission
(“Commission”)! on the recommendations of its Investor Advisory Committee (“IAC”)
regarding target date mutual fund (“TDF”) disclosure. Together with our community affiliate,
Working America, AFL-CIO affiliate unions represent more than 12.5 million workers across the
country in all sectors of our economy, including manufacturing, construction, transportation,
grocery and retail, food processing and meatpacking, health care, education, hospitality,
entertainment and all levels of government.

u The request for additional comment on the proposed rule on Investment Company Advertising: Target

Date Retirement Fund Names and Marketing (“Proposed Rule”) was published in the Federal Register on April 9
2014 and is available at http://www.gpo.gow/fdsys/pke/FR-2014-04-09/pdf/2014-07869.pdf/.