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Benefits July 19, 2004
Plan Sponsors Opt For Life Cycle Default Option
July 19, 2004 (PLANSPONSOR.com) - More plan sponsors
are selecting life cycle mutual funds as their employee
401(k) plans' default investment option, seeing these
investments as appropriate investment options for workers
that are otherwise unengaged in saving for their
retirement.
Reported by Eric Hazard
Fidelity Investments, in the firm’s Retirement Benefit Insights report, found nearly 500 employershave designated Fidelity’s life cycle option, Freedom Funds, as the plan’s default option. In fact, the number of employers with Freedom Funds as the default option has increased 164% since 2001. Overall, these funds now hold more than $19 billion in assets for 860,000 workers in Fidelity retirement accounts.
“Many employers have identified life cycle funds as an opportunity to better equip their employees to achieve long-term investing goals,” said Steve Deschenes, executive vice president, Fidelity Institutional Retirement Services Company. “This is evident in the 71% of workplace savings plans serviced by Fidelity that offer Freedom Funds as an investment option within their plan and the growing number of employers designating these funds as their default investment option.”