Now we can add IBM to the ranks of U.S. corporations sending their workers down the defined-contribution highway.

With Big Blue’s announcement that in 2008, it will freeze pension benefits for its 117,000 U.S. employees—nearly 6,000 in Minnesota—and instead offer only a 401(k) plan, another chunk of the U.S. work force will be on its own in determining how to invest for retirement.

The changeover from defined-benefit plans—in which employers assume liability for making the investments that back their employees’ retirement—to defined-contribution plans, which shift that responsibility to employees, has been sweeping. According to the Pension Benefit Guaranty Corporation, the federal agency that insures private defined-benefit pensions, about 22 million Americans were covered by defined-benefit plans in 1985. By 2002, the most recent year for which data are available, that number was down to 17 million—despite a 25 percent increase in the overall civilian work force over that same period.

I am a strong believer in the power of the individual, but I also think we have a responsibility to prepare people for success. In turning over investment choices to employees, employers are all too often leaving those workers utterly adrift, providing little or no education and counseling to help them make informed choices based on their income, tolerance for risk, and time remaining until retirement.

In part, this is because employers have had to tiptoe through a thicket of legal liability issues and government regulations. According to 2001 Department of Labor guidance, retirement-plan providers can only offer specific investment advice if it’s through an objective third party. Efforts to loosen the rules have so far not gained approval in Congress.

A 2002 survey by the Profit Sharing/401(k) Council of America found that only about 52 percent of all defined-contribution retirement-plan sponsors offer their participants some form of investment advice. More than half of those contract with companies that provide advice via the Internet. About 32 percent of plans offer a telephone helpline.

Diane Berthel, a principal of Berthel Schutter LLC, a pension fund advisory firm in St. Paul, says sponsors of 401(k) plans have a legal responsibility to carefully vet such contract services. “Plan sponsors . . . have to ask three key questions: Is the reasoning behind the advice sound? Are the costs that are passed on to participants reasonable and competitive? And finally, will the average investor-participant find it easy to use?”

So far, the job of advising isn’t getting done very well. About half of the clients who come to us initially have a 401(k) asset allocation that is misaligned with their overall objectives, especially when those investments are considered in light of their other assets.

What can employees do to help themselves? First, talk with the human resources department at work. Ask if your company uses any outside advisors who can teach you how to think about retirement in a broad, holistic context. Then ask if your company can refer you to an advisor who will help you specifically with investment decisions.

Next, go see a financial advisor. Saving through a defined-contribution plan like a 401(k) is an evolving process. The way you save and the investment vehicles you use should change over time and fit with other decisions you’ve made about your financial future. Get professional advice.

If you’re an employer, especially a small business, pay attention to Berthel’s advice. Defined-contribution plans are much less expensive to offer than defined-benefit plans are, but adding investment-advisory services for your employees is both necessary and expensive.

The state of the nation’s retirement preparedness is a major deal, especially as the 77 million people who make up the baby boom near that stage of their lives. The better prepared we are as individuals and companies, the more sound our economy will be.