Once considered the ideal solution for overwhelmed, undersaved investors, target date funds continue to draw fire post-crash. As SmartMoney has reported, even some of the most conservative funds -- portfolios of stocks and bonds designed to get less risky as retirement approaches -- lost 30% to 40% of their value in 2008.

Now politicians and investor advocates are calling for action. The results of excessive risk can be devastating for those on the brink of retirement, said Sen. Herb Kohl (D., Wisc.), in a hearing of the Senate Committee on Aging Wednesday. He called for the Securities and Exchange Commission or the Department of Labor to better define target-date funds, and said he would consider legislation as well.

The problem, as Kohl and other critics see it, is that there is wide variation among target-date funds. Their underlying mix of stocks and bonds differs from fund family to fund family; some grow more conservative, faster, while others retain a good deal of stock exposure near the target date. As a result, two funds with a target date of 2010 might have radically different underlying holdings: Oppenheimer s 2010 fund (OTTAX) had 65% in stocks and lost 41% in 2008; the NestEgg 2010 portfolio (NECPX) had about 32% in stocks and lost less than 10%. (An Oppenheimer spokesperson says that one-year results are not a true assessment of long-term performance. )

The spotlight is particularly bright for target-date funds now. The funds took on new importance when the Pension Protection Act of 2006 allowed them to be used as default investments in 401(k)s and other retirement plans -- in other words, an appropriate choice for someone who doesn t make a choice.

At the same time, the government also approved automatic enrollment, making it acceptable for employers to enroll workers in a 401(k) plan unless they explicitly ask to opt out. The result is that more workers are investing, and more of them are using target-date funds to do so, even when they haven t actively chosen those funds. That s been a boon to the fund companies: At the end of 2007, more than one in three 401(k) investors was using a target-date fund, and the Employee Benefit Research Institute estimates that 35% of plan assets will be invested in target-date funds by 2015.

That makes it especially important to have consistency in the category when it comes to the mix of stocks and bonds, advocates say. It s crucially important to have names that mean one thing, says Mercer Bullard, president of Fund Democracy, an shareholder advocacy group. People have to get what they expect.

The mutual fund industry disagrees, saying that there are different opinions about the appropriate mix, which are reflected in the funds. There is no right single glide path and government should not dictate the solution or attempt to regulate exposure to investment risk, wrote Paul Schott Stevens, president of the Investment Company Institute, in Congressional testimony.

But the SEC already has rules that at least loosely require fund names to match their investing style. A large-cap growth fund is required to invest most of its assets in big company stocks. But those rules have lagged the recent innovations of the fund industry, which is moving away from single-style funds and toward one-stop solutions like target-date funds. As of now, a target-date fund can be whatever a fund company says it is. And that, says Bullard, is the problem: People didn t expect the risk that they ended up with. If I was in a 2010 fund, I d be pretty upset with a 40% loss.