Prudential "Redefines" Retirement

Prudential says that “Redefining Retirement” is a “new model for the design, management and administration of workplace-provided retirement plans.”   The concepts underpinning the design were outlined in a whitepaper recently published by Prudential (see  Prudential Suggests DC Plans Design Improvements ) .   

Prudential says their new model creates a retirement “glide path” that carries participants “not only to retirement, but through retirement” with auto-pilot plan features—such as automatic enrollment, automatic contribution escalation, and automatic asset allocation—combined with Prudential IncomeFlex Target, a guaranteed minimum withdrawal benefit product, “to help ensure adequate savings and a guaranteed stream of income in retirement.”

For Plan Sponsors

For plan sponsors, “Redefining Retirement” offers “streamlined processing, leading to greater cost efficiencies” – as well as “additional levels of fiduciary risk support and enhanced levels of indemnification,” according to the announcement.

“Today, more than ever before, running a successful retirement program has become increasingly difficult for plan sponsors,” said Christine Marcks, president of Prudential Retirement, a business of Prudential Financial Inc.. “Our’ Redefining Retirement’ model stands apart by mitigating risk, by helping sponsors meet their fiduciary responsibilities, and by offering protective pledges, or commitments, that indemnify sponsors for certain losses.”

The Prudential program includes four key elements:

• Smart plan design—which it says optimizes plan participation through auto-enrollment and better matches. It boosts savings with an automatic contribution accelerator, maximizes savings by helping participants follow a thoughtful planning strategy, encourages continuous saving by discouraging loans, maximizes accumulations with catch-up contributions and eliminates costly inactive accounts by allowing small-balance rollovers;
• Streamlined processing—which Prudential says helps to gain cost efficiencies and automates data exchange, lightens the administrative load with outsourcing, and simplifies processing by automating all transactions;
• Investments and guaranteed income—which the firm says deliver differentiation through qualified default investment alternatives, including Prudential's target date funds, as well as an option that delivers guaranteed income for life. The model also offers investment flexibility through Prudential's sub-advised options and access to retail mutual funds, as well as Prudential's Stable Value offerings; and
• Lifelong education and support—which Prudential claims offers convenient and effective education through powerful online capabilities.

"The market is hungry for solutions that work," said Jamie Kalamarides, senior vice president, Retirement Solutions. "We believe that 'Redefining Retirement' is the beginning of a broader, long-term shift in the design, management and administration of retirement programs, and we also believe that Prudential is one of only a few providers in the industry that can deliver this kind of bold solution for the systemic problems facing the U.S. retirement system."