Putnam Investments announced that its President and Chief Executive Officer, Robert L. Reynolds, will outline a sweeping retirement reform agenda in Washington, D.C. before an audience of the nation’s 401(k) industry leaders, retirement plan sponsors, and mutual fund executives. Reynolds will call on employers, plan providers, regulators, and Congress itself to act now to solve the nation’s retirement savings crisis, which was made more severe and urgent by the securities market declines of 2008.

Recognizing the declining role of traditional pension plans and Social Security, Reynolds, a 25-year retirement industry veteran who was recently named one of the most influential people in the defined-contribution retirement business*, will call for dramatic expansion and strengthening of 401(k)s and other defined-contribution savings plans to reliably deliver lifelong income to workers. Among the steps Reynolds will call for:

Oversight/Regulation

• Creating a new national insurance charter, a national insurance regulator, and a fund to back up lifetime income guarantees from insurers. The fund would be similar to that which the Federal Deposit Insurance Corporation maintains to protect bank deposits.
• Curbing the volatility of highly popular lifecycle funds by limiting the share of equity investments in the mature phase of lifecycle funds for people nearing retirement or in retirement. Some lifecycle funds, intended for those nearing or in retirement, had more than half of their assets in equity securities in 2008, Reynolds noted, worsening the impact of last year’s declines on those who needed to draw on their nest eggs for current income.
• Mandating that retirement plan advisors and providers make full, transparent disclosure of fees, risks, and responsibilities in plain English, without burdening participants with irrelevant details.
• Providing clear, strong legal protection to employers who offer advice and guidance and to those who include lifetime income guarantee products in their savings plans.

Plan Design

• Mandating automatic enrollment, savings escalation, and guidance to qualified default options for all employer-sponsored retirement savings plans.
• Requiring that workplace savings plans build in an option to secure a “retirement paycheck,” enabling any participant to choose an assured lifetime income option in the form of annuities or other insured, non-annuity income streams.
• Ensuring that all workplace savers have access to the advice and guidance they need for asset allocation, retirement planning, and lifetime income strategies.
• Recognizing the growing importance of alternative risk-mitigating investment options and strategies (e.g., longevity insurance, absolute return).

Tax Incentives

• Extending tax credits to employers who voluntarily “match” worker savings contributions since these employers are helping to meet a national savings challenge. Workers’ own contributions are already tax-advantaged.
• Providing additional tax incentives to employees who invest in protected lifetime income products. Since converting life savings into lifelong income is even more challenging than accumulating a nest egg in the first place, the decision to give up some control of assets should be rewarded