Differences in investments of defined benefit plans, which are run by investment professionals, and defined contribution plans, in which the investments are selected by employees, has caused concern among some plan sponsors.
At E.I. du Pont de Nemours & Co. Inc., Wilmington, Del., about 61% of the defined benefit plan is in equities, while 20% of the defined contribution plan is in DuPont stock, and another 20% in other equities.
Michael Wyatt, head of DuPont's defined contribution plan, points to several reasons for the differences. To many, he says, "the defined contribution plan is not regarded as strictly a retirement vehicle." For example, "a lot of individuals will use the money (in the plan) as a downpayment for a car or a house."
The lack of equity investments in the defined contribution plan also can be attributed to "the generally conservative nature of individual investors," said Mr. Wyatt.
