100 Half Day Road | Lincolnshire, IL 60069 

t 847.295.5000 | f 847.295.7634 | aonhewitt.com 

January 14, 2011 

Submitted electronically via the Federal Rulemaking portal @ www.regulations.gov

Attention: Target Date Amendments 

Office of Regulations and Interpretations 

Employee Benefits Security Administration 

Room N–5655 

U.S. Department of Labor 

200 Constitution Avenue, NW. 

Washington, DC 20210

Dear Sir or Madam, 

Subject: Hewitt EnnisKnupp Comments on Target Date Disclosure (RIN 1210-AB38) 

Hewitt EnnisKnupp, an Aon Hewitt Company, is pleased to submit the following comments on the proposed 

target date fund (“TDF”) disclosures as they relate to qualified default investment alternatives (“QDIAs”). 

Who We Are 

Aon Hewitt is the global leader in human capital consulting and outsourcing solutions. The company 

partners with organizations to solve their most complex benefits, talent, and related financial challenges, 

and improve business performance. Aon Hewitt designs, implements, communicates, and administers a 

wide range of human capital, retirement, investment management, health care, compensation, and talent 

management strategies. With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world 

a better place to work for clients and their employees. 

Comments on Target Date Disclosure 

Hewitt EnnisKnupp is supportive of the Department of Labor’s objective to provide plan participants and 

beneficiaries using TDFs as a QDIA with sufficient information to make informed decisions. However, we 

believe it is important to avoid inundating participants and beneficiaries with excessive information, in 

particular in areas where more confusion can potentially arise. 

Hewitt EnnisKnupp offers the following recommendations on specific items included in the proposed 

regulation. 

Coordination of Disclosures 

Given the similarities with disclosure requirements under the participant level fee disclosure rules under 

section 2550.404a-5(d), we believe that it is important to harmonize the TDF disclosure language across 

both regulations. Having two separate regulations with relatively similar requirements may be confusing for 

participants and raise complexity for parties attempting to comply with the disclosures. As such, we strongly 

suggest establishing one set of rules for TDF disclosure that is common for participants that use the 

vehicle, whether or not it is a QDIA. Additionally, the fact that QDIA disclosures and required 

participant-level fee disclosures will be provided to the same group of participants at approximately the 

same time (initially and annually), may overwhelm or confuse participants. Accordingly, we also suggest 

that a plan with a QDIA be allowed to provide a single set of disclosures for both QDIA and participant-level 

fee disclosure, in order to promote uniformity and clarity. 
Attention: Target Date Amendments 

Page 2 

January 14, 2011 

Comprehensive Information About TDFs 

Asset Allocation Model

Hewitt EnnisKnupp believes establishing a model for disclosing asset allocation and other key features of 

TDFs would be beneficial. For example, it is possible to graphically represent asset allocation changes over 

time in a variety of ways (e.g., percentage of equity in the portfolio, more granular level asset class 

allocations, portfolio risk characteristics, etc.). Providing a standardized approach for glidepath exhibits may 

be the most effective way to present easy-to-understand information to participants and beneficiaries. The 

simplest way of illustrating a glidepath is depicting the equity allocation over the course of the lifecycle, 

similar to the chart below. For the purposes of these exhibits, most non-traditional asset classes that do not 

fall under equity or fixed income are allocated as equity (e.g., commodities, real estate). 

Lifecycle Fund Rolldown

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

22273237424752576267727782879297

102

Age

Equity Allocation

Manager ABC

Changes in Asset Allocation 

In addition, we urge the Department to consider the best methodology for explaining the changes to asset 

allocation over time. The explanation should focus on the fact that not only will the asset allocation become 

more conservative over time, but also that the asset allocation within the various investment categories may 

change (i.e., the glidepath may shift). Considering that TDFs are in their relative infancy and glidepaths are 

continually evolving, it would be beneficial for the notice to disclose that the asset allocation of the Income 

Fund today, for example, may be different than its asset allocation in the future. Further, the level of detail 

required of TDF managers that employ tactical asset allocation should be evaluated. It is important to 

recognize the simplicity of effectively communicating a strategic asset allocation that does not change 

based on the provider’s near-term views of the market in contrast to the complexity of a tactically managed 

TDF strategy which continually adjusts its asset allocation on an ongoing basis. Guidelines with respect to 

the level of detail necessary to explain tactically allocated fund series may minimize participant confusion. 

We recommend that a disclosure is added for those strategies using tactical allocation that describes the 

manager’s ability to dynamically change the asset allocation, when tactical allocation is most likely to be 

employed, and specific tactical bands for each target date fund, both by level of total equity and asset class 

(if applicable). 

100 Half Day Road | Lincolnshire, IL 60069 

t 847.295.5000 | f 847.295.7634 | aonhewitt.com 
Attention: Target Date Amendments 

Page 3 

January 14, 2011 

100 Half Day Road | Lincolnshire, IL 60069 

t 847.295.5000 | f 847.295.7634 | aonhewitt.com 

Contribution and Withdrawal Assumptions 

Regarding the need to explain “any assumptions about a participant’s or beneficiary’s contribution and 

withdrawal intentions on or after such date,” Hewitt EnnisKnupp believes it would be optimal to eliminate 

such requirement from the disclosure altogether. First and foremost, it is likely that a select few TDF 

providers do not have set assumptions regarding participant contributions and withdrawals. For those that 

do, we believe that disclosure of such is not necessary for a participant or beneficiary’s well-rounded 

understanding of TDFs and their objectives. 

Required Statement on Potential Losses 

The required statement that “a participant or beneficiary may lose money by investing in a qualified default 

investment alternative, including losses near and following retirement...” may be helpful but seems to 

otherwise single out TDFs as having the potential to lose money. While we support the need to identify the 

absence of guarantees regarding investment gains and adequacy of income, it should be clearly stated that 

this condition applies for virtually all other defined contribution plan investments and QDIAs as well. 

Paperwork Reduction 

Hewitt EnnisKnupp feels strongly that this and other participant-level disclosures should be provided to 

participants and beneficiaries via electronic means to the greatest extent possible. While electronic 

distribution will not only significantly reduce costs, we also believe participants are more likely to read 

communications delivered in an electronic format. 

Closing 

Hewitt EnnisKnupp greatly appreciates the opportunity to present the comments above and we welcome 

any follow-up questions. 

Sincerely, 

Hewitt EnnisKnupp 

Mark Kastory 

Defined Contribution Research 

(312) 715-1700 

mark.kastory@hewitt.com