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Two types of defined contribution plan is a plan that the investment activities of the property be conducted by donors and investment plan that works is controlled by the participants. Investment policy established by the plan to control by the donor is a simple operation of the planning process DB, here we will focus on the type of plan directed by participants.

Investment issues of the DC plan as follows:

• Diversify. Sponsors must provide a list of investment options allow participants to set up the portfolio accordingly. For example, in the United States, section 404 (c) of ERISA to establish a safe landing for DC project sponsor when there are recommendations on investment options are not effective or not careful if design or ( 1) at least three investment options to diversify the opposite of each other and (2) provision for participants can switch freely between the options. DC plan sponsors conducted by members often provide sophisticated retirement planning tools such as Monte Carlo model to support decision-making process of participants.

• Securities business. Understanding between corporate securities financing should be limited to ensure that the assets of participants is sufficiently diversification.

Even for DC plan led by members, donors still have to have a plan drafted investment policy. Investment policy document in which donor perspective plan satisfies the responsibility of the guardian to make a complete process for the selection of investment options provided to participants as well as for the periodic evaluation of these options; moreover, established a policy of investment may be required by law. DC plans, however, the investment policy is quite different than the DB plan. A DC investment policy making process to ensure that the wealth of the objectives and constraints of individual investors yet clear. Here is an example of a DC investment policy.

2.2.1. Models and limited purposes in the course of the creation of DC plan sponsors do not set goals and limitations; participants themselves out own risk and profit targets as well as the term processing. Donors to provide resources and training, but participants are responsible for the selection of a target risk and profit to light own financial situation, objectives and risk attitude.

As noted above, participants in DC plans bear the investment risk would result. Therefore, an investment policy for DC plans to meet a very different role than a DB plan's investment policy. For example, an investment policy for DC plans is conducted by members of monitoring document which describes the investment strategy and the alternatives available to group members which have the conflicting objectives and constraints. A policy such investment is necessary to become a general text on the principles rather than a monitoring investment policy for a specific member. Example 3-10 provides an excerpt of an investment policy for a DC plan directed by its members.

Purpose: The purpose of this investment policy is to support the members of the Retirement Policy Committee (RPC) to set up, monitor, evaluate and modify an effective investment program is made to the defined contribution plan (the Plan) funded by DMSR company (BMSR). Powers to set out the responsibilities of this is due to the action of the board BMSR meeting on 26/03/2002. The purpose of this investment policy are as follows:

• a clear distinction between the responsibilities of the RPC, plan members, fund managers and guardians of Planning / data holder selected by RPC

• Provide a description of the alternative investment options available to plan members.

• Provide for joint standards for monitoring and evaluating the performance of the investment managers and the means (funds) investment in relation to the appropriate investment mold.

• Provide criteria for the selection, termination or change management / fund.

• Establish effective communication processes for fund managers, guardians, RPC and members of the plan participants.

The role and responsibilities of the RPC: RPC responsibility in the implementation of the investment policy, including:

• Monitor the fund's objectives and selection of certain funds to propose to provide plan members more likely to diversify.

• Monitoring the effectiveness of investment, including the cost of the proposed fund and plan members to terminate or change the investment fund as it feels right and appropriate.

• Ensure smooth communication, and appropriate training resources for plan members

• Select, monitor and, if necessary, propose changes in the Plan's guardian.

• Make sure that the interest rate of the debt plan in accordance with the provisions of the Plan.

Roles and responsibilities of participants: Responsibilities of the members of the plan include pumping the allocation of contributions and the accumulation of Planning in various funds and is responsible for training yourself to perform reasonable allocation of assets in the period in office or life.

Active asset allocation of a member is a function of many variables, including age, income, time before retirement, risk tolerance, cumulative target, target replacement pension income and other assets. To allow participants to create savings and investment strategies consistent with individual needs, plan offers many investment options with multiple profit targets and different risk characteristics.

The most appropriate location and plan members make individual decisions about how to allocate assets between investment options. Therefore, the orientation of the investment account to delay selection of employees and contributions by BMSR will be the responsibility of each member. Responsibility of each member is allocated assets in personal funds as the situation changes.

To support the above mentioned factors, BMSR will provide information to participants regarding the investment options and the basic principles of investing. However, the distribution of materials and the provision of alternative investments by BMSR not mean that the advice to participants.

Profit and risk are two fundamental concepts of investment activities. Over time, the alternative investments offer higher expected returns would indicate a greater level of risk (for example, the transformation of the profit or the initial value of the property). Plans to offer a variety of investment options other password in order to give participants the opportunity to to strategic choices profit / risk consistent with savings, their investment objectives and to perform multi- full diversification.

Application of ERISA 404 (c): BMSR intend to apply the provisions of Section 404 (c) of ERISA, by (in different ways), making a huge investment choice and diversity; allowed to transfer funds between investment options at least once in 90 days; while providing sufficient investment information to participants on a regular basis.

Selection of alternative investments: The role of the RPC is to provide participants a wide range of investment options with various investment objectives to make its members can invest based on their different investment needs. Investment choices made should indicate the type of property to the characteristics of different risks and benefits and the value of diversification. The following assets have characteristics desired investment is now:

• The money market instruments.

• Financial Instruments medium-term fixed-income

• Treasury Securities adjusted to a medium-term inflation

• Shares

Large cap growth stocks

Large cap stocks mixed

Large-cap stocks

Mid cap stocks mixed

Small cap stocks mixed

International stocks

• mutual fund life cycle (the funds were set up have diversified at retirement) The selection criteria and the replacement of the fund include:

• A wide range of investment options should be selected with the goal of allowing participants to diversify their investments and risks of the investment is consistent with the risk tolerance of the investment.

• The fund must have reasonable fees, including consulting fees, 12 (b) -1 and other charges.

• Each fund must have an investment strategy is set and clear explanation and must have evidence of this strategy being pursued over time.

• Profit from time to time and change the profitability of the fund for at least 3 years (preferably 5 years) before comparing good faith performance of a passive direct indicators with the same type of investment (e.g., large-cap stocks). This is a key performance indicator.

• The selected fund must:

Managed by a bank, an insurance company, an investment management company or an investment adviser (as defined by the Law on registered investment advisor in 1940) which was largely financed production management were at least 10 years and has found financial stability in that period.

Provide data on the quarterly performance is calculated including the time factor and the report on the total amount of fees and charges net.

Provide effective assessment indicates risk profile investment - profit of managers in relation to the passive index management and the other with the same type of investment.

Yet clear investment strategy applied and the documents proving that this strategy has been successfully applied over time.

• The transfer of funds between the investment fund is allowed in at least a quarter time, in order to satisfy the requirements of ERISA 404 (c)

Effective monitoring of investment: RPC will monitor investment performance and risks of each fund quarterly compared to landmark reasonable investment efficiency. In the case of a fund over a period of 5 years:

• Activity is less effective than an index fund with similar objectives (e.g. the same type of investment) or

• Rated less than 50% of funds with similar investment objectives in terms of investment efficiency.

RPC will review the fund to determine whether the performance of the fund by the fund managers, management practices or changes of the market, which will then decide whether the fund should be removed from the portfolio investment option or not. RPC will also review the performance of the fund over a period of five years, if possible, before making a decision.

As pointed out above, the RPC will evaluate the performance of each fund over a period of 5 years. RPC noticed that most of the investments are cyclical; therefore, at a time when a fund may not achieve the investment objectives or

When the fund failed to achieve the expected performance. The effect of this fund should be reported in the form of an annual rate of return taking into account the time factor. As mentioned above, these profits need to be compared with the appropriate index and similar funds in the most recent 5-year period (or longer).

In assessing the performance of each fund, authorized RPC recommendations change or delete a goal or an investment fund if the investment standpoint of RPC, objectives or investment funds that do not or is expected to achieve the targets specific activities; no longer fit the needs of Members or;, or if the point of view of the RPC, when a more appropriate investment options appear.

A member of the Commission of BMSR responsible investment of funds rapidly developing small cap stocks. Within two years, the fund has ranked in the top small cap investment funds grow faster and more efficient operation compared to a passively managed index include small chemical tyvon increase rapid growth. However, the value of the fund fell more than the overall market. Investment committee members have proposed alternative to RPC funds. Does the target in the investment policies support the proposal?

Answer: According to the instructions in the written investment policy, investment performance should be evaluated over a period of more than two years. The investment policy also specified on comparing the performance of an index fund is managed passively with similar investment style rather than with the common market. For these reasons, The investment policy can not support the proposal for the replacement of funds.