How Many Fund Choices in a Defined Contribution Pension Plan ? www.proteusperformance.com

Background Over last couple of decades number of fund choices in a defined contribution plan has evolved from a few options to a significant number of choices Natural progression driven by both technological improvements and the desire of plan sponsors to offer their members new options www.proteusperformance.com

Over last couple of decades number of fund choices in a defined contribution plan has evolved from a few options to a significant number of choices

Natural progression driven by both technological improvements and the desire of plan sponsors to offer their members new options

Issues in Plan Design As a plan sponsor issues to consider when selecting the investment options available in a defined contribution plan include: Choice Overload Education Fund Distinction www.proteusperformance.com

As a plan sponsor issues to consider when selecting the investment options available in a defined contribution plan include:

Choice Overload

Education

Fund Distinction

Choice Overload Too many fund choices may lead to the following issues: - Plan member may choose safest option, e.g. money market fund - Plan member may make no choice and be placed in the default option www.proteusperformance.com

Too many fund choices may lead to the following issues:

- Plan member may choose safest option, e.g. money market fund

- Plan member may make no choice and be placed in the default option

Choice Overload One may ask if there are an optimal number of funds to offer Though there is no one single magic number, the table below provides some guidance: www.proteusperformance.com Source: Wells Fargo, 2006 Best Practices in Retirement Plans Survey.

One may ask if there are an optimal number of funds to offer

Though there is no one single magic number, the table below provides some guidance:

Education Increased fund choice is coupled with the responsibility to provide increased education Graph below indicates that financial education efforts can often result in good intentions but very little action www.proteusperformance.com Source: CAP Trends & Thoughts, Shaping Retirement Savings Programs and Their Use, June 2007.

Increased fund choice is coupled with the responsibility to provide increased education

Graph below indicates that financial education efforts can often result in good intentions but very little action

Fund Distinction A large number of funds can cause plan member confusion Difficult for an employee to differentiate between funds with potentially similar names that are managed differently If there are multiple funds in a given asset class the member needs to be educated on their differences www.proteusperformance.com

A large number of funds can cause plan member confusion

Difficult for an employee to differentiate between funds with potentially similar names that are managed differently

If there are multiple funds in a given asset class the member needs to be educated on their differences

Contact Us To learn more please contact us: Proteus Performance Management Inc. Toronto, Ontario Canada Phone: 416-421-3557 Fax: 416-421-1348 Email: pension@proteusperformance.com www.proteusperformance.com www.proteusperformance.com

To learn more please contact us:

Proteus Performance Management Inc.

Toronto, Ontario Canada

Phone: 416-421-3557

Fax: 416-421-1348

Email: pension@proteusperformance.com