Press Release
Principal Financial Supportive but Urges Caution on President's Savings Proposals
DES MOINES, IA, February 7, 2003 -- The Principal Financial Group supports President Bush's proposals to simplify workplace retirement savings plans but cautions that proposed changes in individual savings plans could do more harm than good.
"We applaud the Administration's proposal to consolidate the myriad of retirement plans into one account, the Employer Retirement Savings Account (ERSA), which would greatly simplify the rules for small employers and enable them to establish retirement plans," says Larry Zimpleman, executive vice president--Retirement and Investor Services at The Principal. "We are concerned, however, that the Administration's new individual savings account proposals, particularly the Lifetime Savings Accounts (LSAs), could undermine employer-sponsored retirement plans and lure individuals into programs that focus more on short-term savings than long-term financial security."
Mr. Zimpleman explained that LSAs may seem more appealing to savers because they offer tax-free earnings without the withdrawal restrictions of most other tax-favored savings plans. Individuals can withdraw the money at any time for any reason without penalty. LSAs could also tempt smaller employers to forgo traditional retirement plans. He added that sponsorship of plans by employers is a critical element to the success of American savers.
"The evidence is overwhelming that saving through the workplace is far more effective and efficient than truly individual savings arrangements," said Mr. Zimpleman. "Employer-sponsored plans offer the discipline of payroll deduction, assistance from a trusted advisor to provide worksite education and communication and the opportunity and incentive to help employees save by offering an employer match."
"We believe Congress must proceed with caution to ensure that well-intentioned changes don't sabotage the ultimate goal: helping American workers achieve retirement security."
The Principal will continue to serve as an available resource to the Administration and Congress as they refine these proposals. "As a provider of a broad range of retirement savings programs for more than 60 years, The Principal is well positioned to be among the leaders in this effort to stimulate retirement savings, no matter what form the new types of retirement savings programs take," said Mr. Zimpleman.
About the Principal Financial Group
The Principal Financial Group 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 mortgage banking through its diverse family of financial services companies. More employers choose the Principal Financial Group for their 401k plans than any other bank, mutual fund, or insurance company in the United States. A member of the Fortune 500, the Principal Financial Group has $111.1 billion in assets under management and serves some 13 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.
###
401khelpcenter.com, LLC is not the author of this press release and is not associated or affiliated with any firm or organization mentioned unless otherwise noted. Use of any information obtained from this press release is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.
