New survey results from AllianceBernstein show that retirement plan participants have a “high” understanding of target-date funds. However, the bar for understanding is set pretty low.

The investment management firm defines high understanding by the fact that most investors know what the “date” in target-date means and that TDFs’ asset allocation is designed to get more conservative as investors close in on retirement.

That’s all it takes to constitute “high” understanding? That’s pretty disappointing.

Speaking of disappointing, AllianceBernstein also finds that just more than half of plan participants in same survey believe — wrongly — that enrolling in a TDF guarantees them the retirement income that they’ll need.

Oh lord.

That naivete clearly explains why the survey also reveals that 81% of TDF participants are equally or more satisfied with the funds than other investment options their retirement plan offers, and why 26% are confident that they’ll have a secure retirement.

In a gross understatement, AllianceBernstein’s head of defined contribution investments Thomas Fontaine said, “we still have more work to do.”

Clearly.

Still, I ask in all seriousness: Shouldn’t the “we” in Fontaine’s statement be investors? What more can employers really do to improve employees’ retirement security? Share your thoughts in the comments.

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