In the three decades since 401(k)s were legislated into existence, a growing share of U.S. workers have depended on defined contribution plans to supply their retirement income. By 2005, there were approximately 62 million active participants in DC plans versus 33 million in private and public defined benefit pension plans.

The shift in responsibility from corporate investment professionals to individuals for managing retirement assets has not been without problems. A number of studies have shown that most DC participants are saving too little and investing too haphazardly to accumulate enough wealth for an adequate income level during retirement. Recent trends and legislation such as the Pension Protection Act are remediating these problems by encouraging companies to automatically enroll workers in DC plans and place a larger share of them in professionally managed asset allocation funds — the most widely available of which are target-date funds.

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