Honeywell managed to update the investment offerings in its $9.7 billion 401(k) plan last year while maintaining the plan's low-cost structure despite obstacles thrown up by the financial markets turmoil.

At the end of 2007, Honeywell's savings plan had 11 investment choices; the offerings used an indexed approach and were almost all commingled funds or separate accounts. The lineup, unchanged for more than 10 years, included a set of three lifestyle funds that provided conservative, moderate and aggressive investment options.

When employees were automatically enrolled in the savings plan, the default investment was the short-term fixed income fund. Given new regulations about default investments, Honeywell decided to add target-date funds to the lineup and use them as the default, while eliminating the lifestyle funds to avoid any confusion among participants. "The goal was to eliminate what could be perceived as some duplicate offerings," says Charlie Malone, U.S. leader of savings plan investments at Honeywell. After considering providers of target-date funds and the asset allocations they use over time, Honeywell settled on Barclays LifePath funds.

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