There’s nothing like a booming economy to cover up flaws in a retirement plan’s investment strategy, design and oversight. Then again, a near collapse of the global financial system has a way of stripping away that mask. “The recession and volatility we’ve seen in the marketplace have brought plan issues much more to the forefront,” says Susan Walton, a senior investment consultant at benefits consulting firm Towers Watson & Co.

The upside? In today’s challenging economic environment, plan sponsors get the chance to learn from the mistakes of the past. Institutional Investor talked to a dozen money managers, recordkeepers, consultants and industry advocates to shed some light on the most common mistakes made by the sponsors of defined benefit and defined contribution plans.

Knee-jerk investment strategies. The biggest example of this is the defined benefit plan that clings to the traditional 60 percent equities/40 percent fixed-income asset allocation — regardless of its liabilities or funding status. “Historically, assets were managed by the left eye and benefits were managed by the right eye, and the eyes didn’t connect,” says Joseph McDonald, head of Hewitt Associates’ North American global risk services. When the markets collapsed in 2008, many of these professionals failed just as badly as the unsophisticated 401(k) participants, neglecting to do something as basic as rebalancing to maintain their long-term investment strategies.

Lousy communication. Sponsors dump thick stacks of paper on their workers once or twice a year instead of feeding them a steady flow of frequent, short tip sheets to reinforce the basics, a tactic that’s especially important in a market downturn. “If it’s more than a page or two — or more than a screen, if it’s electronic — I don’t read it,” says Stewart Lawrence, national retirement practice leader of Segal Co.’s Sibson Consulting division.

Inadequate contributions. The percentage of salary contributed to a 401(k) plan when new employees are automatically enrolled is too low. The norm is 2 to 3 percent of salary, inching up to 6 percent. Many experts say it should be 10 percent.

The belief that more is better. Defined contribution sponsors can’t seem to shake the belief that the more investment options they offer, the better off investors are — even though studies have shown that people freeze if faced with too many choices. Plans are still dishing out 50 to 100 options when industry experts recommend only one to two dozen.