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Josh Cohen Senior Consultant Russell Investments December 3, 2009

Learn about the shift of DC plans towards retirement security & the importance of considering institutional solutions. Explore various income solutions available for plan sponsors. Presented by the IRIC.

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Josh Cohen Senior Consultant Russell Investments December 3, 2009

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  1. “DC Plans – What about the distribution phase?”National Pension and Institutional Investor Summit Josh Cohen Senior Consultant Russell Investments December 3, 2009 www.irirc.com

  2. Who is the IRIC? • Non-profit group of 15+ industry consultants and advisors plus 3-4 co-sponsors with focus on institutional retirement income solutions. • The mission of the IRIC is to facilitate the culture shift of defined contribution plans from supplemental savings plans to programs that provide retirement security. • The vision of the IRIC is to be recognized by plan sponsors, intermediaries, recordkeepers, product manufacturers and distributors, as the industry’s leading source of information and thought leadership on institutional retirement income solutions. For IRIC Use Only 2

  3. Evolution of Defined Contribution Plans • Defined Contribution becomes the retirement plan • Shifts key risks from plan sponsor to participants: market, inflation, longevity • Applying lessons from “behavioral finance” improves outcomes • How does participant receive sustainable lifetime income stream? • * Private Pension Plan Bulletin, Abstract of 2006 Form 5500 Annual Report, US Department of Labor Employee Benefit Security Administration, December 2008 For IRIC Use Only 3

  4. Why Plan Sponsors Should Consider Institutional Retirement Income Solutions Before analyzing any income solutions, Plan Sponsors should ask themselves: • What problem(s) are we trying to solve?, e.g.: • Transitioning from a DB plan (enhancing the value of the DC plan) • Retaining assets in the plan (in-plan solutions) • Declining productivity • Large portion of workforce nearing retirement age • Improve employees’ financial security • What level of commitment do we have? • Simply make it available • Actively encourage • Achieve meaningful results (high utilization) • How much are we willing to take on? • Administration • Communication • Costs • Fiduciary liability For IRIC Use Only 4

  5. Types of Institutional Retirement Income Solutions Available income solutions fit into one of six categories: In-plan immediate annuities In-plan deferred fixed annuities In-plan guaranteed minimum withdrawal benefits In-plan guaranteed minimum income benefits Out-of-plan immediate annuity rollover platforms Out-of-plan guaranteed minimum withdrawal benefits For IRIC Use Only 5

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