Putnam Investments today released the initial results — and
impact — of the 401(k) plan participant use of its proprietary
Lifetime IncomeSM Analysis Tool, which helps workers model how much
monthly income their savings might generate in retirement and
determine whether they are on track to maintain their current
lifestyle once they stop working. Early usage by participants in
Putnam-managed 401(k) plans, shows that a significant number of
employees changed their savings deferral, and of those who did, an
overwhelming number opted to increase their savings rate.
At the end of December 2010, nearly 34 percent of 401(k)
participants who interacted with the firm’s Lifetime IncomeSM
Analysis Tool made changes to the amount of income they deferred to
retirement savings; 80 percent of the changes were deferral
increases; and the average savings rate increase was approximately
23 percent, from 7 percent of income to 8.6 percent. The figures
are based on initial results*, which confirms the research that was
instrumental in creating the tool, according to Putnam.
“The challenge that working Americans face to save for
successful retirements has never been greater,” said Putnam
Investments Chief Executive Officer, Robert L. Reynolds. “And
there’s a huge gap between the way people hope or expect to live in
retirement and how they’re actually saving to reach their goals.
One of the most powerful ways to close that gap is to first show
defined contribution savers how far along they are towards reaching
the monthly income they will need once they stop working – and then
let them take immediate action to improve their prospects. Putnam’s
Lifetime Income Analysis Tool, which does exactly that, is already
showing strong, positive results in changing participants’ behavior
and raising their savings rates. We believe it sets a new, higher
standard for workplace savings. ”
“Americans want to do the right thing as they prepare for
retirement, but too often get distracted by market values and asset
allocation pie charts instead of focusing on the bottom line: How
much monthly income their savings are likely to produce once they
are retired,” said Edmund F. Murphy III, Director, Defined
Contribution Services at Putnam Investments. “By including
estimated monthly income in retirement front and center on our
participant Web site, and sharing the information through our call
center and communications programs, we have begun to redefine the
retirement savings experience in a way that is driving positive
changes in behavior that this industry hasn’t seen to date.”
“We are motivating workers to take action by shifting the ‘lens’
through which they view their retirement savings and focusing on
what really matters. By showing them where they stand, explaining
what they can do to help improve their position and helping them to
make midcourse corrections in a simple interactive manner that
helps to alleviate anxiety and inertia, the Lifetime Income
Analysis Tool solves the complexity of saving for retirement,”
Murphy explained.
A recent study by Employee Benefit Research Institute showed
that 90% of workers want statements that show their estimated
retirement income. “Illustrating 401(k) as a stream of monthly
income with prescriptive next steps toward successful outcomes is
proving to be a refreshing and motivating experience for plan
participants and sponsors,” Murphy added.
Putnam launched their Defined Contribution Participant Web site
with the Lifetime Income Analysis Tool in January 2010 to help
participants in Putnam-administered workplace-sponsored retirement
plans view their savings in a way that provides a clear view of
their account’s potential for generating reliable income for life.
Putnam also seeks to help workers understand the actions they can
take to increase their retirement income potential as well as the
trade-offs of such actions by including a number of key financial
elements, such as expected social security income, 401(k) employer
match, and outside retirement assets.
In addition to planning projections, the Web site also gives
plan participants full access to more traditional information about
their retirement accounts, such as investment balances and asset
allocation. Additional information on Putnam’s income in retirement
experience is available at www.putnam.com/401k/tool.
Putnam’s approach to innovation in retirement saving and focus
on successful outcomes has received independent recognition from
industry experts. The redesigned 401(k) defined-contribution plan
Putnam offers to its own employees, which fully integrates the
Lifetime Income experience and enables participates to change their
deferrals in real time, has significantly increased employee
participation and savings rates, according to analyses. As a result
of its plan redesign, Putnam was named a recipient of the New
England Employee Benefits Council’s “Best Benefits Practices of
2010” award. Putnam was also honored by the Profit Sharing/401k
Council of America (PSCA) with two gold awards for its leadership
in developing tools that support retirement plan fiduciaries.
Putnam Investments and Retirement
Since Robert L. Reynolds, a 30-year veteran of the retirement
savings industry, became Putnam’s president and chief executive
officer in 2008, the company has deepened its commitment to the
retirement market and launched a series of innovations and
initiatives to meet emerging customer needs. In addition to
changing the retirement savings experience for plan participants,
these initiatives include new levels of fee transparency, in an
effort to provide the clearest, most complete overview of fees and
expenses in the workplace savings industry.
Putnam has expanded the services it offers to 401(k) retirement
plans and developed products to meet the needs of those planning
for or already in retirement. The firm has created a platform that
provides flexible and scalable services and solutions for advisors,
consultants and their plan sponsor clients in every segment of the
retirement market.
Putnam RetirementReady® Funds, the firm’s suite of 10
target-date/lifecycle retirement funds, added Absolute Return
Funds** to its mix of underlying investments. RetirementReady Funds
became the only suite of lifecycle funds to integrate absolute
return strategies, which seek positive returns over a period of
three years with less volatility than more traditional mutual
funds. Employed in retirement portfolios, Putnam Absolute Return
Funds are intended to pursue positive returns in up and down
markets, to help protect against the harmful effects of adverse
investment returns, and to seek to reduce volatility.
Recently, Putnam announced plans to launch a suite of
income-oriented mutual funds and a retirement income planning tool
that aim to help advisors work with retirees in developing
strategies for monthly income flows, at varying levels of risk
tolerance, to flexibly address their changing lifestyle financial
needs throughout retirement. The product suite, comprised of Putnam
Retirement Income Fund Lifestyle 1, Putnam Retirement Income Fund
Lifestyle 2, and Putnam Retirement Income Fund Lifestyle 3, is
expected to have broad applicability for defined-contribution, IRA
and other retirement assets. ***
About Putnam Investments
Founded in 1937, Putnam Investments is a leading global money
management firm with over 70 years of investment experience. At the
end of February 2011, Putnam had $125 billion in assets under
management, including mutual fund assets of $69 billion and
institutional assets of $56 billion. Putnam has offices in Boston,
London, Frankfurt, Amsterdam, Tokyo, Singapore, and Sydney. For
more information, visit putnam.com.
Putnam mutual funds are distributed by Putnam Retail
Management.
* Research is based on initial data gathered from the activity
of 10,000 participants in Putnam defined contribution retirement
plans, including nearly 3,000 participants that interacted with the
Putnam Lifetime Income Analysis Tool at the end of December
2010.
** Putnam’s Absolute Return Funds are not intended to outperform
stocks and bonds during strong market rallies.
*** A registration statement relating to this security has
been filed with the Securities and Exchange Commission but has not
yet become effective. This security may not be sold, nor may offers
to buy be accepted, prior to the time the registration statement
becomes effective.
The information in the prospectus (or Statement of Additional
Information) is not complete and may be changed. This security may
not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This is not an
offer to sell this security and is not a solicitation to buy this
security in any state where the offer or sale is not permitted. No
offer to buy the security can be accepted and no part of the
purchase price can be received until the registration statement has
become effective, and any such offer may be withdrawn or revoked,
without obligation or commitment of any kind, at any time prior to
notice of its acceptance given after the effective date.
Investors should carefully consider the investment
objectives, risks, charges, and expenses of a fund before
investing. For a prospectus, or a summary prospectus if available,
containing this and other information for any Putnam fund or
product, call your financial representative or call Putnam at
1-800-225-1581. Please read the prospectus carefully before
investing.
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