What is a key aspect of participant education for defined contribution plans?

A key aspect of participant education for defined contribution plans is empowering participants to choose their investments independently. This approach fosters financial literacy and encourages individuals to take ownership of their retirement savings. By providing the necessary education and resources, participants can understand the various investment options available, evaluate their risk tolerance, and make informed decisions tailored to their personal financial goals.

In this context, education should include information on the advantages and disadvantages of different asset classes, the importance of diversification, and strategies for long-term investment growth. When participants are involved in the decision-making process regarding their investments, they may be more likely to engage with their retirement plans actively, leading to better financial outcomes over time.

The other options don't align with the principle of empowering participants:

• Teaching participants to avoid any high-risk investments may limit their opportunities for growth, as some high-risk investments can yield high returns if managed wisely.

• Encouraging exclusive investment in government bonds can overly conservative, potentially resulting in insufficient growth to meet retirement goals.

• The idea of providing no education assumes that all participants already possess the necessary knowledge, which is rarely the case. Most individuals benefit from guidance on making informed choices regarding their retirement investments.