Voluntary Pensions Help Enable Financial Security – Press Release

DES MOINES, Iowa–(Business Wire)–In most countries around the globe, people are living longer. The aging
of the population poses special challenges for today’s emerging markets,
where mandatory pension systems often cover just a fraction of the
workforce and replacement rates are usually inadequate. Many elders
still rely on the extended family for support, but the family is coming
under stress as economies modernize and birthrates decline. In a new
report from the Global Aging Institute (GAI), sponsored by Principal
Financial Group, voluntary pension programs are highlighted as a
critical ingredient in ensuring global retirement security in emerging
markets.

“As today’s emerging markets age, meeting the needs of people in
retirement is becoming increasingly complicated and difficult,” said
Richard Jackson, president of GAI and author of the report, Voluntary
Pensions in Emerging Markets: New Strategies for Meeting the Retirement
Security Challenge
. “Governments need to understand that
strengthening voluntary pension systems is a critical part of the
solution, particularly in those emerging markets where the demographic
shift is more dramatic.”

Globally, there is a shared need to increase the amount people are
contributing to their retirement accounts. Principal works closely with
governments to strengthen their pension systems by sharing best
practices in retirement plan design and providing data-driven insights
from the more than 21 million customers they work with worldwide.

“By working with partners like the Global Aging Institute, we can help
countries to learn from one another and gain access to the data and
information that will help them create the right pension policies for
their populations,” said Renee Schaaf, vice president of Principal
International. There is no single solution to the challenges that aging
will place on governments, but by working together, regulators,
employers and pension providers can develop solutions that will improve
retirement outcomes for citizens around the world.”

Thomas Cheong, vice president of North Asia for Principal International,
spoke about the report while participating in the Global Aging
Roundtable at the Milken Institute’s Asia Summit in Singapore and
highlighted its implications for the region. He stressed the report’s
findings that currently in Asia projections for replacement rates are
not adequate. Workers in Indonesia, for example, will only have a 14%
income replacement rate, far short of the 70% target rate recommended by
pension experts in countries like the United States. Other countries
were also found to have inadequate replacement rates, including Hong
Kong at 33%, Malaysia at 34%, India at 45%, Thailand at 47% and China at
54%.

“Longer life expectancy requires people to save more than they are
currently doing today,” said Cheong. “As we evaluate the future needs of
Asia’s population for the next 20 years and beyond, individual countries
must examine their own unique situation and determine what solutions
best meet the needs of their citizens as their demographics continue to
change. As they do so, we recommend that they pay close attention to the
critical importance of strengthening voluntary pension systems.”

To access the full report, visit www.principal.com/voluntarypensions.

About Principal®

Principal helps people and companies around the world build, protect and
advance their financial well-being through retirement, insurance and
asset management solutions that fit their lives. Our employees are
passionate about helping clients of all income and portfolio sizes
achieve their goals — offering innovative ideas, investment expertise
and real-life solutions to make financial progress possible. To find out
more, visit us at principal.com.

About the Global Aging Institute (GAI)

The Global Aging Institute (GAI) is a nonprofit research and educational
organization dedicated to improving our understanding of global aging,
to informing policymakers and the public about the challenges it poses,
and to encouraging timely and constructive policy responses. To learn
more about GAI, please visit its website at www.GlobalAgingInstitute.org.

Principal, Principal and symbol design and Principal Financial Group are
trademarks and service marks of Principal Financial Services, Inc, a
member of the Principal Financial Group.

Principal Financial Group
Jane Slusark, 515-362-0482
Slusark.jane@principal.com

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