SEC to look at retirement investing risks

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Steve Chiotakis: Meantime, securities regulators are stepping up their scrutiny of retirement investments. The head of the Securities and Exchange Commission, Mary Schapiro, says the financial cops on the beat will focus on new retirement products designed to extract high fees. From Washington, here’s Marketplace’s John Dimsdale.

John Dimsdale: In a recent speech, SEC Chairman Schapiro said she’s created a new division to review financial innovation.

MARY SCHAPIRO: We must be on the lookout for newly emerging risks. Some of those will almost certainly come in the form of new products, particularly those related to retirement investing.

Schapiro says she’ll start with target date funds. Those are 401(k)-type pensions designed to gradually transfer money from the stock market into safer investments as a worker gets closer to retirement.

Alicia Munnell at the Center for Retirement Research says investors have a hard time finding out what they’re being charged to move their money.

ALICIA MUNNELL: People have to understand how much they’re paying to have a target date fund move their portfolio from equities to bonds. When they see that maybe they might think, well I could do that myself.

The SEC is expected to propose better disclosure of fees early next year.

In Washington I’m John Dimsdale for Marketplace.