We're discussing the concept of floor-offset hybrid plans, which combines the features of a defined benefit plan with the features of a combined contribution plan. This type of plan would allow the employees/participants to direct some of their investments, while at the same time protecting said employees/participants from unfortunate market conditions and/or bad investment decisions. When you think about it, this type of retirement plan make sense, given today's unfortunate market conditions.
The reason I say this is because when you're planning for retirement, you want to be able to adequately fund your retirement without sacrificing returns on investments. Defined-benefit plans are more stable, regardless of economic upturns or downturns; however, they do not always offer the best returns. And conversely, while defined-contribution plans offer great returns in a market that is flourishing, the exact opposite is true when the market is faltering. So hybrid plans make sense (like the one I currently have).
In a hybrid plan, you get the benefit of both long-and-short-term investments, and the plan stabilizes as you get closer and closer to retirement age, with the short-term investments decreasing and the long-term investment increasing. For all of you in the workforce right now or currently taking business and finance courses at Berkeley, this knowledge will come in handy--and may save you a small fortune in the future.
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