Changing gears

When considering plan design, plan sponsors should examine contribution levels, member participation and investment options. To begin with, a design that maximizes the accumulation necessary to produce a reasonable retirement income for the plan member significantly reduces sponsor risk. Investment options are another important component of plan design. Too many or too few investment options will cause problems. Then there is the issue of locking in, which recent regulatory changes have failed to adequately address. And plan members who fail to lock in could have insufficient savings down the road. It may be time to consider taking the pressure off the education process and reducing the risk associated with a lack of plan member investment knowledge. This can be achieved through more use of asset allocation funds.