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A well-designed investment menu is key to helping employees achieve their primary retirement goal—a secure monthly stream of income.

By offering the right mix of investments and products that serve your employees' needs, you can position them to retire with confidence while mitigating risk and helping to meet your obligations as a plan fiduciary. The following checklist provides plan sponsors with five steps to consider when designing or evaluating an investment menu:

1. Understand your employees' retirement income needs.

Use segmentation to determine who your employees are and what they need to meet their retirement income goals. Some important factors to consider include employee age, expected years until retirement, investment knowledge and preferences and understanding of retirement income options.

2. Build your investment menu with a focus on retirement income.

Offer diversified financial and investment products that can provide a lifetime of retirement income. Include guaranteed products in your line up, such as low-cost, in-plan annuities. Only fixed annuities can provide a guaranteed stream of income that will last a lifetime. (Note: Guaranteed income from annuities is subject to the issuing insurance company's claims-paying ability.)

3. Include a default investment option.

The use of a default investment option can be effective at engaging employees who aren't proactive in making retirement planning decisions. Select a default investment option that is aligned with your plan's objectives and takes into consideration average employee current age and retirement age, contribution levels, income and other demographic factors.

But remember, a default investment option is an important tool in overcoming employee inertia, but it isn't a substitute for employee engagement—it's a starting point.

4. Provide advice and education to empower employees.

Offer education and advisory services to help employees make informed investment decisions that can lead to better retirement outcomes. Advice and education can help employees to take actions that can help improve their retirement readiness.

5. Understand your fiduciary obligations and establish a well-thought-out process to meet them.

Meeting your fiduciary responsibilities will help to ensure you are providing and engaging employees with appropriate investment menu options. Consider using the following best practices to help ensure you are on track to meeting your fiduciary obligations:

• Maintain a documented process.
• Create and follow an Investment Policy Statement.
• Establish evaluation metrics and benchmarks, and review them on a regular basis to carefully select and monitor fund options.
• Consider engaging an outside expert such as an advisor or consultant.

Your employees need access to the right investment and financial products to build a portfolio that will get them to and through retirement. That's why it's so important to design a plan menu that is built on a foundation of guaranteed income and offers diverse and competitive options.