Voluntary contribution plans require special attention, since each participant makes his/her own investment decisions. CONSULTIVA works with employers to provide plan participants with the solutions and information needed to make adequate decisions. This means relying on sufficient practical information about investment options and portfolio models in an appropriate environment for independent decision making.
It is the duty of the plan sponsor to provide these conditions for plans under Section 404c of ERISA (Employee Retirement Income Security Act). Otherwise, the plan sponsor may be liable for investment decisions made by plan participants.
At CONSULTIVA we have developed procedures to design and implement defined contribution plans following two parallel processes: assist trustees in compliance with section 404c, and assist participants in making informed decisions.
A written investment policy helps fiduciaries monitor education and investment processes. It also allows fiduciaries to establish and articulate investment objectives and benchmarks for the various investment options, which can then be monitored on a regular basis.
Our experience indicates that financial education in the participant’s native culture and language is vital to a plan’s success. Educational materials, as well as group orientations should support a decision making process that each participant can understand and implement.