Retirement planning should be based on an understanding of generating a lifetime income stream. Putnam’s Lifetime Income experience has demonstrated a positive influence on participant savings behavior. The U.S. Department of Labor’s goal of adding lifetime income illustrations on pension benefit statements advances the effort to help retirement plan participants make better savings decisions. Rules governing the distribution of this information should be flexible and open to innovation.

1. PUTNAM INVESTMENTS | putnam.com
Putnam’s innovative efforts to improve retirement information for
plan participants can provide guidance as the federal government
develops new industry rules.
Putnam welcomes the U.S. Department of Labor’s (DOL) efforts to improve lifetime
income information for retirement plan participants. The DOL has published an
Advance Notice of Proposed Rulemaking regarding the proposal to require lifetime
income illustrations on pension benefit statements under section 105 of ERISA.
Putnam President and CEO Bob Reynolds has repeatedly stated that “The best
measure of success for any retirement system is its ability to reliably replace — for
life — the income people made while working.”
With this principle in mind, Putnam’s approach to the 401(k) marketplace has
been to build an interactive user experience for plan participants that seeks to shift
participants’ focus beyond current account balances and allocations and toward
estimated monthly income needs in retirement. Putnam’s goal is to motivate plan
participants to make better savings and investment decisions that will lead to more
successful retirements.
In 2010, Putnam developed and launched the Lifetime Income experience, built
around Putnam’s Lifetime IncomeSM Analysis Tool (LIAT). LIAT seeks to create a
qualitatively different way for participants to experience and interact with their
retirement savings plans.
Now, several years into our effort to assist participants in making better
retirement savings decisions through a focus on estimated monthly income, we
are sharing our approach and insight as the DOL moves forward with rulemaking.
The Lifetime Income Analysis Tool personalizes retirement planning
Putnam’s LIAT provides a personalized estimate of the participant’s retirement
savings plan, including current balances, future employee contributions and
company matches, and projected Social Security benefits. Also factored in, if
provided by participants, are outside retirement savings.
• Retirement planning should
be based on an under-
standing of generating a
lifetime income stream.
• Putnam’s Lifetime Income
experience has demonstrated
a positive influence on partic-
ipant savings behavior.
• The U.S. Department of
Labor’s goal of adding life-
time income illustrations on
pension benefit statements
advances the effort to help
retirement plan participants
makebettersavingsdecisions.
• Rules governing the distri-
bution of this information
should be flexible and open
to innovation.
Keytakeaways
July 2013 » White paper
The public policy challenge:
Fostering innovation to improve
retirement security
Edmund F. Murphy III
Head of Defined Contribution, Putnam Investments
“The best measure of success for any retirement
system is its ability to reliably replace — for life —
the income people made while working.”
— Bob Reynolds, Putnam President and CEO

2. JULY 2013 | The public policy challenge: Fostering innovation to improve retirement security
2
Through LIAT, participants are able to compare their
retirement income needs with their current progress
toward meeting those needs. Participants can immedi-
ately model and assess the impact of changes they can
make to their savings (deferral amounts), retirement
age, and investment mix (asset allocation). And with
one mouse click or phone call they can confirm these
changes, which will be effective as of their next paycheck.
LIAT helps retirement savers overcome inertia
The Lifetime Income Analysis Tool is designed to move
participants away from an often paralyzing discus-
sion of how they need to save millions of dollars in
order to successfully retire. Instead, it encourages an
understanding of the long-term impact of participants’
current saving behavior within their plan — along with
specific, actionable steps they can take to help improve it.
A new feature estimates future health-care costs
Recently, Putnam has built on the LIAT experience
with a new online tool that enables plan participants
to estimate their potential future health-care costs
in retirement. The estimates can be personalized
based on a variety of individual health state data that
participants may enter privately. This new Health Cost
Estimator (shown above) uses the same monthly time
frame as LIAT’s income estimates and can be accessed
by a single click. Our early findings show that having at
least a baseline estimate of health-care costs motivates
participants to increase their savings rates.
Putnam’s Lifetime Income Analysis Tool
The analysis is based on a retirement age
selected by the participant and on invest-
ment returns that reflect the actual asset
allocation of the participant’s account
using stochastic (“Monte-Carlo”) models.
The income estimate is based on gender-
specific mortality tables and assumes
periodic withdrawals from savings that
remain invested throughout retirement.
All results are presented in today’s dollars,
better enabling participants to understand
and analyze the results.
Comparing monthly income with the amount participants
are reasonably estimated to need in retirement creates a
powerful motivation to “close the gap.”

3. PUTNAM INVESTMENTS | putnam.com
3
The LIAT experience points to
several findings1
Since our introduction of LIAT, we have learned:
•Participants better understand monthly retirement
income that is stated in current dollars, and respond to
it more effectively than to a simple statement of total
retirement plan balances and allocations.
•While lifetime income estimates may not always
be precise, they can and should be personalized to
individual circumstances in order to provide meaningful
information to participants.
•Comparison of the monthly income that participants
are on track to create with the amount they are
reasonably estimated to need in retirement creates a
powerful motivation to “close the gap” — most often by
increasing their savings rates, which, in our view, is the
dominant variable in determining retirement readiness.
•Among individuals who use the Putnam Lifetime
Income experience, including the LIAT, 30% changed
their deferral rates, and 8 out of 10 increased the
amount they are saving. On average, deferral rates
among these participants increased by 18%.
Putnam supports wise retirement innovations
Putnam supports the intent of the DOL’s Advance
Notice of Proposed Rulemaking regarding lifetime
income illustrations — to show participants their plan
balance converted into a projected monthly income
stream in retirement. Based on our experience, we
recommend that the DOL consider a number of
modifications to the proposed rule described in the
advance notice.
We recommend that the rule provide significantly
greater flexibility in both the projection and conver-
sion methodologies. For example, we recommend
that highly personalized, more accurate projections,
like those calculated through Putnam’s LIAT, be shared
on plan benefit statements. In addition, we are quite
concerned about the fact that the only allowable
approach for converting balances to retirement income
1 Based on participant website usage data for the period 6/30/10–
6/30/13; LIAT users are defined as participants who logged on
to the website and moved the deferral rate slider on the Lifetime
Income Analysis Tool at least once.
is annuity-based. Since the vast majority of participants
do not annuitize their entire retirement savings at retire-
ment, this conversion approach provides a number that
may not be relevant to most participants’ experience.
In conjunction with greater methodological flexibility,
we would ask the DOL to reconsider the establishment
of safe harbor assumptions, as opposed to allowing a
multiplicity of “reasonable” income projection methods.
As to the specific safe harbor assumptions proposed,
we have a particular concern about the rate-of-return
assumption used in the projection methodology. By
using a fixed rate of return, the methodology ignores the
asset allocation of the participant’s account. Further, the
fixed-rate-of return assumption ignores investment risk.
Beyond that, Putnam supports lifetime income illus-
trations based on future projections, rather than on
current balances only. The goal of presenting monthly
income calculations should be to encourage better
long-term savings and investment decisions. In our
experience, income estimates on balances and contri-
butions projected forward to a personalized retirement
date are highly effective in achieving that goal.
Overall, flexibility is vital. Standardized method-
ologies and safe harbor assumptions can too easily
become established as industry practices. This creates
the danger that beneficial innovation may be stifled.
Dialogue represents an opportunity to
expand what works
Putnam welcomes and supports the DOL’s efforts to
present monthly income in retirement calculations
to participants. We believe that in order to avoid
undercutting the current benefits of innovation and
discouraging future innovation, it is critical that the
final rules be modified to allow greater methodological
flexibility, to avoid safe harbor assumptions that may
codify less-than-ideal standards, and to focus on
the numbers that are most likely to motivate positive
savings and investment decisions.
To explore more details of Putnam’s comments on
the DOL’s proposed rulemaking, review our submission
at http://www.dol.gov/ebsa/newsroom/fsanprm.html.
The Lifetime Income Analysis Tool seeks to create a
qualitatively different way for participants to experience
and interact with their retirement savings plans.

4. JULY 2013 | The public policy challenge: Fostering innovation to improve retirement security
Putnam Retail Management | One Post Office Square | Boston, MA 02109 | putnam.com 282818 7/13
IMPORTANT: The projections, or other informa-
tion generated by the Lifetime Income Analysis
Tool regarding the likelihood of various investment
outcomes, are hypothetical in nature. They do not
reflect actual investment results and are not guarantees
of future results. The results may vary with each use and
over time. The analyses present the likelihood of various
investment outcomes if certain investment strategies or
styles are undertaken, thereby serving as an additional
resource to investors in the evaluation of the potential
risks and returns of investment choices.
Each simulation takes into account the participant’s
current plan balance and investment mix, as well as his
or her age, income, retirement date, contribution rate,
likely future savings, and estimated Social Security
benefit. The tool runs over 50 billion market simulations
to provide an estimate of a monthly income likely to be
generated at retirement. The Lifetime Income Analysis
Tool is an interactive investment tool designed for
Putnam 401(k) participants to illustrate the estimated
impact of a participant’s plan balances and projected
savings on income in retirement. The tool takes into
account both before-tax and after-tax accumulated
balances and future regularly scheduled contribu-
tions for estimated projections. It cannot account for
dramatic changes in a participant’s personal situation,
including unexpected expenses and other financial
situations that may negatively affect one’s estimated
monthly income in retirement. You are advised to
consider your other assets, income, investment options,
investment time horizon, income tax bracket, and risk
tolerance when planning for specific investment goals.
It is recommended that you consult a financial advisor
for more information. It is important to note that the
results from this tool are estimates based on what you
input today. The results are not a guarantee of actual
outcomes and will change as your inputs change.
Health-care costs and projections are provided by
HealthView Services, Inc., a third-party vendor. They
provide broad, general estimates and information that
may help you consider your retirement income needs by
better understanding potential health-care costs. This
estimate is provided for educational purposes only, and
you should not rely on it as the primary basis for your
medical, insurance, investment, financial, retirement, or
tax planning decisions. Costs are estimated, hypothet-
ical in nature, and not guaranteed. Your actual medical
costs will likely vary (sometimes significantly) from the
estimates. Putnam does not believe that HIPAA applies
to the data obtained from plan participants using this
new tool.