In a defined contribution pension plan, who is responsible for choosing the investment options?

In a defined contribution pension plan, the responsibility for choosing the investment options typically falls on the employee. This type of pension plan allows employees to direct their contributions into various investment vehicles, such as mutual funds or stocks, based on their personal financial goals and risk tolerance. The flexibility in choosing investments is a key feature that distinguishes defined contribution plans from defined benefit plans, where the employer manages the investments and guarantees a specific benefit upon retirement.

In a defined contribution plan, the role of the employer is often limited to selecting the general plan structure and providing a range of investment options from which employees can choose. While the plan's advisory board may play a role in overseeing the offerings, it is ultimately the employee who makes the final decision on how their contributions are invested. This empowers employees to take charge of their retirement savings and tailor their investment strategy to fit their individual circumstances. Therefore, the option reflecting that employees are responsible for choosing the investment options is the accurate choice.