In a defined contribution plan, who bears the investment-related risk?

In a defined contribution plan, the employee bears the investment-related risk because the contributions made into the plan are typically invested in a range of options chosen by the employee, such as mutual funds, stocks, or bonds. The future retirement benefits are based on the performance of those investments. As a result, if the investments perform poorly, the value of the retirement savings at the time of withdrawal may be significantly lower than expected. Conversely, if the investments do well, the employee stands to benefit from a larger accumulation of retirement savings. This shift of risk from the employer to the employee is a defining characteristic of defined contribution plans, contrasting with defined benefit plans, where the employer assumes the investment risks and is responsible for ensuring that the promised benefits are provided to retirees.