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Given the older average age of the workforce, the high percentage of retired lives, and the fact that the plan is slightly underfunded, the risk tolerance of the plan is below average. Since the percentage of retired employees is so large the plan is likely to have high liquidity needs. Only having 3% in cash is not likely to give the plan the liquidity it needs (the fact that the plan is underfunded is a clue here), so the allocation to cash should be higher. The plan has an actuarial required return of 6.5%. Although the plan needs to rely heavily on fixed income instruments given the average age of its workforce and large percentage of retired lives, relying entirely on fixed income will not generate the long term returns that the plan needs since it is a going concern. The plan should increase its allocation to U.S. equities, perhaps by reducing the allocation to venture capital since U.S. equities is a less risky asset class, but still exceeds the plan’s required return requirement.