All investments in a pooled account are directed at the discretion of the plan sponsor. Individual participants have no direct control over how their benefits are invested. Participants with benefits in the pooled account are entitled to a ratable interest of all assets in the account. Such accounts are usually valuated on an annual basis, and are based upon an individual participant's assets in the account as of the last valuation date.
Although necessary for defined benefit plans, pooled accounts are becoming less popular with defined contribution plans, and are rarely seen in 401(k) plans.
The advantage of a pooled account is the simplicity of setting up one account over a separate investment account for each individual participant.
The disadvantage is that the plan sponsor is liable for investment decisions made in the account. In addition, a pooled account will not take into consideration the different investment styles and time horizons of various plan participants. If the plan sponsor invests aggressively, and the plan takes some short-term losses, an older participant nearing retirement could conclude that the plan sponsor did not invest the retirement plan in his or her best interest. The same could be said of a younger employee who would prefer an aggressive investment style, but is stuck in a conservatively invested pooled account.