Prudential Cracks the Code on Income Gap in Target-Date Funds

Prudential Retirement today debuted a new retirement-plan solution specifically designed to deliver guaranteed lifetime income, downside income protection, and growth potential for individuals with assets in target-date or life-cycle funds, or in asset-allocation programs.

“We want to help American workers retire more securely,” said Christine Marcks, president, Prudential Retirement, a business of Prudential Financial Inc. (NYSE: PRU). “So, we’re extremely pleased to offer Prudential IncomeFlex® TargetSM (IFX Target), a smart solution that will ultimately increase the number of retirement-plan participants with access to a guaranteed, lifetime retirement-income option. And, as recent market volatility has shown, if participants wait until retirement to start protecting their income, it may be too late,” she added.

Marcks said IFX Target ensures that participants won’t outlive a certain level of income by integrating a guaranteed, lifetime income product into target-date funds, which attracted $58 billion in new investments in 2007, more than all other fund categories combined. IFX Target also protects retirement income against market downturns and allows participants to capture potential market upswings, an especially attractive approach given the market turmoil we’ve all experienced recently, she noted.

Research by Ernst & Young, using its proprietary Retirement Analytics model, found retirees who rely solely on target-date funds may exhaust their savings one-third of the time when withdrawing at an inflation-adjusted rate of five percent of the initial balance. Similarly, married couples could run out of money in more than half of the scenarios tested through the research, which was commissioned by Prudential to study withdrawal benefits associated with target-date funds. IFX Target addresses the shortcomings of withdrawal programs associated with target-date products.

Prudential’s innovative IFX Target provides a guaranteed stream of lifetime income for participants, control over their assets, the potential to capture market growth, and protection from market downturns. Unlike other retirement-income products, such as traditional annuities, Prudential IncomeFlex ® TargetSM does not require annuitization to receive guaranteed income. The fee for the IncomeFlex Target benefit is in addition to investment management charges. Guarantees are based on the claims-paying ability of the issuing company.

Prudential Retirement delivers retirement plan solutions for public, private, and non-profit organizations. Services include state-of-the-art record keeping, administrative services, investment management, comprehensive employee investment education and communications, and trustee services. With nearly 86 years of retirement experience, Prudential Retirement helps meet the needs of nearly 3.6 million participants and annuitants. Prudential Retirement has $150.2 billion in retirement account values as of December 31, 2008.

Prudential Financial, Inc., a financial services leader with approximately $558 billion of assets under management as of December 31, 2008, has operations in the United States, Asia, Europe, and Latin America. Leveraging its heritage of life insurance and asset management expertise, Prudential is focused on helping individual and institutional customers grow and protect their wealth. The company’s well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. Prudential's businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. For more information, please visit www.news.prudential.com. To maintain the Prudential IncomeFlex Target benefit, you must invest in a Prudential IncomeFlex Target Fund. Like all variable investments, these funds may lose value. Withdrawals in excess of the Lifetime Annual Withdrawal Amount will reduce future guaranteed withdrawals proportionately. Prudential’s IncomeFlex Target Funds are separate accounts available under group variable annuity contracts issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT. PRIAC does not provide any guarantee of the investment performance or return of contributions to those separate accounts. PRIAC’s guarantee of certain withdrawals is supported by PRIAC’s general account and is contingent on its claims paying ability. You should consider the objectives, risks, charges, and expenses of the funds and guarantee features. For this and other information, please read the “Important Considerations” prior to investing. Product availability and terms may vary by jurisdiction and product version. Subject to regulatory approvals. Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Contract form #GA-2020-TGWB2-0805 or state variations thereof. Prudential Retirement, Prudential Financial, PRU, Prudential and the Rock logo are registered service marks of The Prudential Insurance Company of America, Newark, NJ and its affiliates. INST-20090402-A030160