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Benefits April 13, 2010
Vanguard Reports Increased Use of Target-date Funds
April 12, 2010 (PLANSPONSOR.com) – A new Vanguard study reports a significant increase in the use of target-date funds in retirement plans.
Reported by Rebecca Moore
In 2009, 75% of defined contribution plans at Vanguard offered a target-date fund, up from 13% in 2004, and 42% of the participants in those plans invested in the funds.Of those 42% participants, Vanguard estimates that half chose the funds voluntarily rather than being placed in them as a default investment.
Of all plans at Vanguard that have designated a Qualified Default Investment Alternative (QDIA), 80% had chosen target-date funds as the default. In addition, 21% of Vanguard plans have adopted automatic enrollment – quadruple the number since the end of 2005 – and nine in 10 plans with automatic enrollment are using target-date funds as their designated default fund.
The report analyzed 3.2 million participants holding 3.4 million accounts in 2,200 defined contribution plans administered by Vanguard.
The report, Target-Date Fund Adoption in 2009, is here.