Contents:

Scope and Themes What you need to know Abbreviations and terms Abbreviations Terms Executive Summary Industry overview Market overview Figure 1: DC plan assets, 1996-2006 Small businesses Automatic enrollment Investment trends Recent legislation New products in the marketplace The Mintel 401(k) consumer survey Figure 2: Attitudinal differences between 401(k) owners and non-owners, January-October 2006 Market Drivers—Enrollment and Investment Issues Enrollment and participation rates stagnating Impact of automatic enrollment Figure 3: Employer reasons for not adopting automatic enrollment in the future, 2007 Permanent status for the Roth 401(k) Figure 4: Reasons for employers not adopting Roth 401(k) in near future. February 2007 Popularity of IRAs and impact of rollovers Emergence of the CIT Inroads made by ETFs Lifecycle and lifestyle funds re-energized by PPA Figure 5: Percentage of assets in lifecycle and lifestyle funds, IRAs and employer-sponsored DC plans, 1997-2006 DC plans using advisors as intermediaries Figure 6: Type of advisor used by employers to evaluate investment options, 2007 Figure 7: Items of importance in selecting or evaluating a DC plan provider (ratings), 2007 Figure 8: Default investment using automatic enrollment, 2007 Investment-only business Rising awareness of healthcare costs as part of retirement savings Matching contributions Automatic enrollment “Prepackaged” advice Targeting efforts toward the next generation of retirement savers Market Drivers—Desired Plan Benefits and Use of Advisors What employees care about Figure 9: Employees: Importance of benefits offered, February 2007 Figure 10: Employers: Importance of benefits offered, February 2007 Figure 11: Employees: Likelihood of switching to company with retirement plan, February 2007 Figure 12: Employees: Importance of matching contribution, February 2007 Figure 13: Employees: Matching contribution offered, February 2007 Participants’ use of advisors and need for advice Figure 14: Employees: Have a professional financial advisor, February 2007 Figure 15: Employees: Services of professional financial advisor, February 2007 Figure 16: Employees: Rely on outside experts, February 2007 What employers are doing about advice Figure 17: Employer: Company preference for usage of guidance/advice, February 2007 Figure 18: Employer: Reasons for not offering investment guidance/advice, February 2007 Figure 19: Employer: Entity that should be most accountable for selecting and monitoring investment options in a retirement plan, February 2007 Figure 20: Employer: What is offered to help transition employees, February 2007 Market Drivers—Legislative Developments 403(b)s to be more like 401(k)s Automatic IRAs Proposal to make index funds mandatory for 401(k)s Decline of the defined benefit plan What plan sponsors are doing Figure 21: Reasons not to offer employee funded retirement plan in next two years, February 2007 Figure 22: Length of time with current plan administrator, February 2007 Figure 23: Changes to plan in past 12 months, February 2007 Figure 24: Types of changes to 401(k) plans in last 12 months, February 2007 Other Market Drivers Tax-exempt workers Small businesses Growing popularity of socially responsible funds Behavioral finance begins to play a role Non participation and financial behavior Figure 25: Retirement confidence survey, 2007 Figure 26: Expected standard of living during first five years of retirement, 2007 Market Size and Segmentation Types of pension plans and market penetration Figure 27: Defined contribution plan assets, 1996-2006 401(k)s Figure 28: Top defined contribution plan managers, 2006 Mutual fund classes Figure 29: Mutual fund retirement assets by type of account and fund, year end 2006 Figure 30: DC record keepers, by total record kept assets, 2007 Figure 31: DC record keepers, by percentage increase in record kept assets, 2005-06 Figure 32: DC record keepers, by number of record kept plans, 2007 Figure 33: DC record keepers, by total record kept participants, 2007 Figure 34: DC record keepers, by record kept assets in 401(k) plans, 2007 Figure 35: DC record keepers, by record kept assets in 403(b) plans, 2007 Figure 36: Percentage share of total 403(b) plan assets, by type of institution, 1996-2006 Figure 37: DC record keepers, by record kept assets in 457 plans, 2007 Figure 38: DC record keepers, by record kept assets per plan, 2007 Figure 39: DC record keepers, by new plans won in 2006 Distribution of assets in the DC plans Figure 40: Where U.S. retirement assets are held, year end 1996 -2006 Figure 41: Defined contribution plan assets held in mutual funds vs. other investments, 1996-2006 IRAs Figure 42: Source of IRA assets, by percent of total IRA assets, year-end 2004 Figure 43: where IRA assets are held, percentage share by type of institution, 1996-2006 Age and worker tenure Figure 44: Percentage of plan participants, by age, August 2007 Figure 45: Percentage of plan participants, by job tenure, August 2007 Asset allocation by participants in DC plans Lifecycle and lifestyle funds Figure 46: Lifecycle fund assets and market share – top five complexes as of July 2007 Levels of DC plan participation Figure 47: Participation in defined contribution retirement plans by selected worker and establishment characteristics, private industry, 2006 Figure 48: Percentage of salary toward retirement this year, February 2007 Figure 49: Changed percentage of contribution in past 12 months, February 2007 Account balances Figure 50: Average account balance, by age and tenure, 2006 Figure 51: Median account balance among long-tenured participants, by age and salary, 2006 Asset allocation strategies Figure 52: Level of understanding of asset allocation, February 2007 Figure 53: Current retirement savings allocation, February 2007 Figure 54: Average asset allocation of 401(k) accounts, by participant age (% of account balances), 2006 Figure 55: Distribution of 401(k) plans, participants and assets by investment options, 2006 Competitive Landscape New products in the marketplace Lifecycle funds Additional savings programs Advice products Rollovers Retirement Income through annuity-type products Behavioral finance initiatives Advertising and Promotion Figure 56: Top 10 mutual fund advertisers, advertising spend, January-May 2007 Notable print and direct mail advertising Figure 57: fidelity low-cost annuity print advertisement, October 2007 Figure 58: e401(k) Retirement Plan from Fidelity Investments, enrollment mailer, August 2007 Figure 59: TIAA-CREF print advertisement, October 2007 Figure 60: Retirement funds from Vanguard print advertisement, July 2007 Figure 61: TD Ameritrade target date exchange traded funds print advertisement, October 2007 The Consumer—Who Owns What and How Much is Invested 401(k) plan participant demographics Types of plans owned Figure 62: Ownership of retirement plans, by gender, August 2007 Figure 63: Ownership of retirement plans by age, August 2007 Figure 64: Ownership of retirement plans by income, August 2007 Figure 65: Ownership of retirement plans by race/ethnicity, August 2007 Figure 66: Ownership of DC retirement plans by level of education, August 2007 Figure 67: Ownership of DC retirement plans by employment status, August 2007 Household assets in retirement accounts Figure 68: Total invested in all of household’s retirement accounts (such as 401(k), IRA, etc.), by gender, August 2007 Figure 69: Total invested in all of household’s retirement accounts (such as 401(k), IRA, etc.), by age, August 2007 Figure 70: Total invested in all of household’s retirement accounts (such as 401(k), IRA, etc.), by income, August 2007 Figure 71: Total invested in all of household’s retirement accounts (such as 401(k), IRA, etc.) by race/ethnicity, August 2007 Figure 72: Total invested in all of household’s retirement accounts (such as 401(k), IRA, etc.), by presence of children, August 2007 Retirement savings: Attitudinal differences Figure 73: Attitudinal differences between 401(k) owners and non-owners, January-October 2006 The Consumer—Types of Investments and Planning Undertaken Retirement savings: Financial planning activities Figure 74: Types of financial planning done, by gender, August 2007 Figure 75: Types of financial planning done, by age, August 2007 Figure 76: Types of financial planning done, by income, August 2007 Figure 77: Types of financial planning done, by race/ethnicity, August 2007 Consumers and lifecycle funds Figure 78: I invest in lifecycle or lifestyle funds that automatically rebalance my portfolio for me, by gender, August 2007 Figure 79: I invest in lifecycle or lifestyle funds that automatically rebalance my portfolio for me, by age, August 2007 Figure 80: I invest in lifecycle or lifestyle funds that automatically rebalance my portfolio for me, by income, August 2007 Figure 81: I invest in lifecycle or lifestyle funds that automatically rebalance my portfolio for me, by race/ethnicity, August 2007 Consumers and investment decision making Figure 82: Primarily make the decisions in household as to how retirement savings should be invested, by gender, August 2007 Figure 83: Primarily make the decisions in household as to how retirement savings should be invested, by age, August 2007 Figure 84: Primarily make the decisions in household as to how retirement savings should be invested, by income, August 2007 Figure 85: Primarily make the decisions in household as to how retirement savings should be invested, by race/ethnicity, August 2007 Consumers and use of advisors Figure 86: I pay an independent advisor to manage my account for me, by age, August 2007 Figure 87: I pay an independent advisor to manage my account for me, by income, August 2007 Figure 88: I pay an independent advisor to manage my account for me, by race/ethnicity, August 2007 Figure 89: I would be interested in having someone manage my account for me for a flat fee, by gender, August 2007 Figure 90: I would be interested in having someone manage my account for me for a flat fee, by age, August 2007 Figure 91: I would be interested in having someone manage my account for me for a flat fee, by income, August 2007 Figure 92: I would be interested in having someone manage my account for me for a flat fee, by race/ethnicity, August 2007 Figure 93: Percentage who have obtained advice from a financial professional in the past year The Consumer—Incidence of Changing Investments and Views on Retirement Plan Options Consumers and involvement in monitoring retirement accounts Figure 94: I have changed the investments in my retirement portfolio in the last year, by gender, August 2007 Figure 95: I have changed the investments in my retirement portfolio in the last year, by income, August 2007 Consumers and the number of investment options in their plans Figure 96: I feel that there are not enough investment options in my retirement plan, by gender, August 2007 Figure 97: I feel that there are not enough investment options in my retirement plan, by age, August 2007 Figure 98: I feel that there are not enough investment options in my retirement plan, by race/ethnicity, August 2007 Are there too many options? Figure 99: I feel there are too many options in my retirement plan, by age, August 2007 Figure 100: I feel there are too many options in my retirement plan, by income, August 2007 Figure 101: I feel there are too many options in my retirement plan, by race/ethnicity, August 2007 Figure 102: I feel there are too many options in my retirement plan, by marital status, August 2007 Consumers and use of the Internet for decision making Figure 103: I use information from sources on the Internet to make decisions about my retirement savings, by age, August 2007 Figure 104: I use information from sources on the Internet to make decisions about my retirement savings, by income, August 2007 Consumers and level of understanding of investment options in their plans Figure 105: I understand all of the investment options offered in my retirement savings plan, by gender, August 2007 Figure 106: I understand all of the investment options offered in my retirement savings plan, by income, August 2007 Consumers and account monitoring Figure 107: I do not pay as much attention to my retirement portfolio as I should, by gender, August 2007 Figure 108: I do not pay as much attention to my retirement portfolio as I should, by age, August 2007 The Consumer—Interest in Guaranteed Products and ETFs Consumers and guaranteed products Figure 109: Interested in mutual funds that incorporate a guarantee component, by age, August 2007 Figure 110: Interested in mutual funds that incorporate a guarantee component, by income, August 2007 Figure 111: Interested in mutual funds that incorporate a guarantee component, by race/ethnicity, August 2007 Consumers and exchange traded funds Figure 112: Interest in exchange traded funds for retirement accounts, by age, August 2007 Figure 113: Interest in exchange traded funds for retirement accounts, by income, August 2007 Figure 114: Interest in exchange traded funds for retirement accounts, by race/ethnicity, August 2007 The Consumer—Who They Turn to for Retirement Advice and Why Consumers and trust: Who they rely on for retirement advice Figure 115: Most trusted to give good retirement planning advice, by age, August 2007 Figure 116: Most trusted to give good retirement planning advice, by income, August 2007 Figure 117: Most trusted to give good retirement planning advice, by race/ethnicity, August 2007 What inspires consumers’ trust Figure 118: Why consumers trust an organization the most, by gender, August 2007 Figure 119: Why consumers trust an organization the most, by age, August 2007 Figure 120: Why consumers trust an organization the most, by income, August 2007 Future Trends and Forecast “Automatic” solutions “Single Decision” investment options Rise of the Roth Increased access to advice Expanding role of advisors Increased interest in offering investment only business Emphasis on retirement income solutions Increased competition for rollover IRAs Increased availability of CITs and ETFs Increased emphasis on the Internet to facilitate retirement planning Defined Contribution retirement plans for small employers More targeted approach to encouraging retirement plan participation Healthcare as part of retirement savings Appendix: Trade Associations Investment Company Institute Employee Benefits Research Institute 401(k) Council for America Society of Professional Administrators and Recordkeepers (SPARK) American Association of Retired Persons

Companies Mentioned

- Investment Company Institute - Employee Benefits Research Institute - 401(k) Council for America - Society of Professional Administrators and Recordkeepers (SPARK) - American Association of Retired Persons