He gets riled about risk

Before being elected to the Senate, Herb Kohl ran his family’s grocery and department store business.

“He approaches everything from a customer service perspective,” said Ashley Glacel, a staff aide who has worked for the Wisconsin Democrat for almost three years. “He gets fees and truth in advertising.”

That explains his outrage at the catastrophic losses suffered by 401(k) participants in 2010 target date funds, some of whom lost their entire savings because their funds were overweighted in equities. In 2008, investment losses for these funds were as high as 41%, with an average loss of almost 25%.

Mr. Kohl, chairman of the Senate Special Committee on Aging, held hearings this year with the Labor Department and the Securities and Exchange Commission to examine the way target date glide paths differ from fund to fund and, in some cases, expose investors to unexpected risk.

Next year, he will turn his committee’s attention to the growing number of retirement income products, such as annuities.

“One thing we saw from our work with target date funds this year is that people are getting used to the idea of having a 401(k),” said Ms. Glacel, who acts as a spokeswoman for the committee. “But what do those people do when they take that money out after they retire?”

The committee is expected to hold hearings in the spring to examine the various products and proposals that are designed to help retirees live off their savings.

Mr. Kohl’s campaign to regulate target date funds is up against significant opposition.

The mutual fund industry represents a powerful lobby that might stifle his attempts, experts said.

“The Department of Labor might come out with guidance about how 401(k) plan sponsors can effectively carry out their fiduciary duty with regard to target date funds,” said Ryan Alfred, president of BrightScope Inc., a 401(k) ratings and analytics firm. “But I don’t expect the SEC to do anything.”

Mr. Kohl will keep fighting.

“In my 24 years working in this area, I have never seen the Aging Committee get so involved in these issues,” said Marcia Wagner, founder and principal of The Wagner Law Group. “He seems to have gotten pension religion.”