Human Resources: Securian paper offers target date fund guidance for plan sponsors

St. Paul, MN, March 10, 2010 – When target date funds were introduced in
the mid-2000s, they seemed to offer employers a good choice for employees
looking to simplify their investment option selection. Target date funds
quickly became popular and are expected to swell to $2.6 trillion by 2018.

When the market fell in 2008, employers and employees learned that the
absolute level of risk within each target date fund is not always apparent.
The declines in fund values drew the attention of the Department of Labor
and subsequent hearings explored those concerns.

In a paper available at SecurianRetirementCenter.com, the company offers
commentary on target date funds as investment options in retirement plans.

“At the very least, target date funds should be held to the same standards
as other investment options in a plan’s investment array,” said Kent
Peterson, CFA, FSA, AIF, Securian Retirement’s director of investment
services and author of the paper. “In fact, the case could be made that
they should be held to a higher standard whenever the participant usage and
the proportion of assets invested is high.”

The paper highlights four aspects of target date funds that employers can
consider when determining whether a fund is right for their plan. They are:
1. Risk across the target date time horizons so appropriate risk levels for
   participants can be identified.
2. Risk-adjusted returns and expenses to determine which target date funds,
   if any, achieved strong returns relative to a valid benchmark and a
   reasonable level of expense relative to other target date funds.
3. Holding the underlying funds to the same standards as other stand alone
   investment options offered in a plan’s investment array.
4. The reliability and repeatability of investment results. Although past
   performance does not guarantee future results, historical data may
   assist plan sponsors with their reviews.

The paper also gives Securian’s perspective on target date funds. When
evaluating the four areas of analysis in the Securian paper “plan sponsors
may find that target date funds are not a prudent choice for their plan
participants.”

Since 1880, Securian Financial Group and its affiliates have provided
financial security for individuals and businesses in the form of insurance,
investments and retirement plans. Now one of the nation's largest financial
services providers, it is the holding company parent of a group of
companies that include Minnesota Life Insurance Company.

Securian is a fiduciary with regard to the selection and monitoring of the
investments that underlie the unregistered separate accounts of its
variable group annuity products and takes this responsibility very
seriously.

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