The Principal Financial Group Launches Next Generation Retirement Prog

The Principal Financial Group Launches Next Generation Retirement Program

    Business Editors

    DES MOINES, Iowa--(BUSINESS WIRE)--April 27, 2005--

Principal Retire Secure Addresses Retirement Security Crisis -- Dramatically Increases Savings by American Workers through New Employer Retirement Savings Services

    With the nation teetering on the brink of a retirement security crisis, the days of "do-it-yourself" retirement services alone are virtually gone. According to the Principal Financial Well-Being Index(SM), American workers today want more personalized, "do-it-for-me" solutions in order to achieve financial security(1). To address the nation's retirement savings challenge, the Principal Financial Group(R), the nation's 401(k) leader and total retirement solutions innovator, is launching the next generation in retirement programs called Principal Retire Secure(SM)(Retire Secure).
    Principal Retire Secure boosts the power of one of the most successful savings tools available today --the employer-sponsored retirement plan-- by automating, simplifying and guiding decision making by the American worker. But unlike many retirement programs, Retire Secure does not stop with education. The pilot program, conducted in 2004, actually changed the savings and investing behavior of plan participants.

    Challenges for the American Worker

    The program comes at the right time with Americans retiring younger and living longer, resulting in a retirement savings shortfall for many. Yet while retirement planning has never been more important, the vast majority of Americans fear and avoid it. As a result, nearly 75 percent of Americans today do not feel very confident they will have enough money for a comfortable retirement (EBRI 2005 Retirement Confidence Survey).
    According to Monica Kirgan, vice president of Individual Investor services at The Principal, "Retire Secure tackles investors' fears, mistakes and even paralysis and apathy," she said. "The personalized program pinpoints employees' individual retirement needs, giving them more confidence to face their financial fears and ultimately help them retire securely."
    For employers, Kirgan says the program increases the value of critical benefits. Retire Secure was designed to help employers increase employee recruitment, retention and loyalty by offering a more competitive and useful benefit program. At the same time, the program supports the employer's fiduciary responsibility, and effectively prepares workers for a more secure retirement. Employers in the pilot reported increased employee participation and deferrals, as well as improved asset allocation goals among participants who utilized the program. For financial professionals, the program is a differentiator that further enhances their important role helping employer and individual investor clients make critical retirement planning decisions, Kirgan added.

    Employer Feedback is Positive

    According to one Retire Secure client -- Eagle River Water & Sanitation in Eagle County, Colorado -- the program resulted in increasing participation dramatically in their 457 plan. "One of our managers said Retire Secure was an epiphany for him," said Leslie Isom, manager of administration for Eagle River. "All of a sudden, he realized he was behind the curve and needed to save a lot more."

    Features of Principal Retire Secure

    The Retire Secure program consists of several key components, including:

--	Easy Enrollment: a new streamlined process for enrolling in the retirement plan using a very simplified enrollment form.
--	Smart Start: Enrolls employees at a set savings rate, which typically matches or exceeds the employer match rate, if offered.
--	Principal Step Ahead Retirement Option(SM)(Principal Step Ahead): Helps keep retirement savings on pace by automatically increasing savings each year by a specified rate and time period.
--	One-on-one professional planning: Employees no longer need to wonder if they're making sound decisions. Retire Secure provides the employer with a personal team of financial professionals who meet one-on-one with employees in the workplace. They are salaried professionals trained to help employees enroll in the plan, understand investment options, consolidate outside investments into a comprehensive picture, and calculate retirement savings needs. For employees who need additional personal planning assistance beyond the retirement plan, they are able to meet with a Retire Secure team member outside the workplace to develop a personal financial strategy, transition into retirement and manage on a fixed income, and meet other complex needs such as insurance protection, college funding and personal savings.

    Kirgan says Retire Secure is unlike any competitor plan in that it is designed to meet the needs of all employees-not only the highly-paid executives, but the general employee base regardless of salary level or assets in a plan. Retire Secure provides solutions that are meaningful to employees at different stages of life and levels of retirement savings preparation. Through the workplace, Retire Secure is flexible enough to match employer dynamics - whether face-to-face meetings in the workplace or phone-based meetings with employees in multiple remote locations are appropriate.

    Results--Proves Successful Helping Workers Save

    The results of the Retire Secure pilot program are compelling (piloted with 13,096 employee participants and 56 employers). Of employees who attended a Retire Secure one-on-one meeting and completed an Easy Enrollment form as part of the pilot, results include:

    -- Overall participation in retirement plans increased eight
    percent.

    -- On average, existing participants who increased their savings
    deferral did so by more than three percent.

    -- New participants deferred an average of 5.7 percent.

    -- Twenty-three percent of participants completing enrollment
    materials selected the Principal Step Ahead option. On
    average, employees chose to increase their savings rate by an
    additional 1.2 percent of salary each year for four
    consecutive years.

    -- Forty percent of new participants chose the Smart Start
    option.

    -- Thirty-four percent of employees chose to meet one-on-one with
    a Retire Secure team member. Thirteen percent of those
    participants completed a Retirement Planning Analysis
    providing a plan of action for their complete retirement
    picture.

    -- The number of participants using the asset allocation models
    was three times higher following the introduction of this
    program, with nearly 50 percent of participants who
    participated in one-on-one meetings (and were in employer
    plans with this option) choosing target-date or risk-based
    asset allocation investments.

    According to Kirgan, Principal Retire Secure will be introduced in key markets throughout 2005 and into 2006.

    About the Principal Financial Group

    The Principal Financial Group(R) (The Principal (R))(2) is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $168.7 billion in assets under management(3) and serves some 14.9 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.

    (1) The Principal Financial Well-Being Index asked workers what question they would most like to ask a financial advisor--72% of workers said they wanted help selecting the right product to reach their financial goals; 64% said help calculating the amount needed to meet their financial goals; and 55% said help setting their financial goals.

    (2) "The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.

    (3) As of December 31, 2004

--30--HB/ms*

CONTACT: The Principal Financial Group, Des Moines Susan Houser, 515-248-2268 houser.susan@principal.com or Terri Shell, 515-283-8858 shell.terri@principal.com

KEYWORD: IOWA INDUSTRY KEYWORD: INSURANCE HUMAN RESOURCES BANKING PRODUCT SOURCE: The Principal Financial Group

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