Human Resources: PRUDENTIAL RETIREMENT CALLS FOR STABLE VALUE FUNDS TO CLASSIFY AS A QUALIFIED DEFAULT INVESTMENT

NEWARK, N.J. – In testimony <http://news.prudential.com/images/65/072209J%20King%20ERISA%20Advisory%20Council%20Testimony.pdf> before the U.S. Department of Labor’s ERISA Advisory Council today, James King, Jr., vice president and head of Prudential Retirement’s Stable Value Markets Group, urged that stable value products be classified as a qualified default investment alternative (QDIA) in employee retirement plans.

“The collapse of the financial markets highlights the need for investment options that both protect and grow principal,” King testified. “Participants must have an investment option that enables them to have retirement security.”

Stable value products, offered by retirement plan providers, such as Prudential Retirement, are included in nearly half of 401(k)s or defined contribution retirement plans, according to the 13th Annual SVIA Stable Value Investment & Policy Survey. King stated, “Stable value funds are able to deliver high returns with low volatility because of the unique insurance protections built into these products.”

King testified that stable value products minimize risk by investing in high quality securities and that in 2008, every stable value fund produced a positive return for the year. King also testified that stable value providers:

· Are regulated by a number of government entities, such as the Securities and Exchange Commission and state insurance regulators, which are focused on ensuring stable value products are designed appropriately.

·Must meet statutory requirements based on regulations to provide for the reserving of capital to meet obligations. This distinguishes stable value providers from traditional investment products, which do not reserve capital to protect investors from losses.

·Align the interests of investors and asset managers because stable value providers have an incentive to invest conservatively with high quality, diversified portfolios.

King also testified about the need for plan sponsors and investment consultants to access information to evaluate the benefits and risks of stable value products, especially given their unique combination of an insurance guarantee and a fixed income portfolio. “During the fourth quarter of 2008, Prudential adopted practices that significantly increased the transparency of our general account stable value products’ investment strategy and portfolio holdings,” said King. “These disclosures are in addition to comprehensive statutory filings already provided to state insurance regulators, which are available to the public. They include a line-by-line listing of each individual holding in all of the insurance company’s general and separate accounts. Lastly, we also provide disclosure on performance and product characteristics to both participants and plan sponsors.”

The U.S. Department of Labor’s ERISA Advisory Council, which is charged with making policy recommendations to the Secretary of Labor on retirement security issues, heard testimony from industry experts on July 22. The hearings focused on stable value options and retirement security in the current economic conditions.

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 over 85 years of retirement experience, Prudential Retirement helps meet the needs of nearly 3.7 million participants and annuitants. Prudential Retirement has $151.2 billion in retirement account values as of March 31, 2009.

Prudential Financial, Inc., a financial services leader with approximately $542 billion of assets under management as of March 31, 2009, 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 approximately 50 million 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 <http://www.news.prudential.com> .