BOSTON — NAFCU Preferred Partner Pentegra Retirement Services has teamed up with State Street Global Advisors to offer target retirement date funds to defined contribution plan participants.

With "target date" retirement funds, employees choose the target retirement fund that is closest to the date of their retirement: 2015, 2025, 2035, or 2045. Each fund is a mix of cash, bonds and stocks, the percentage of each based on years to retirement. As the years go by, the funds are rebalanced and become incrementally more conservative. The funds aim to help eliminate the confusion many investors feel when faced with too many mutual fund choices in the typical 401(k), according to Pentegra and State Street.

"While this type of fund benefits employees by offering simplicity and adequate diversification, it is typically one of the higher cost options," said Gwen Burroughs, chief marketing officer at Pentegra. "In many cases, asset allocation funds are funds of funds, and often charge expense ratios exceeding 1.5% for both the asset allocation overlay and the underlying fund management. SSgA's Target Retirement Strategies are index-based so they can provide requisite diversification at a much lower cost."