Putnam Plans Addition of R Share Classes

Putnam Investments plans to offer two new share classes to qualified retirement plans.

Putnam filed May 3 with the Securities and Exchange Commission to add two share classes—R5 and R6—to allow qualified retirement plan sponsors to separate investment management fees from recordkeeping and administrative fees for their plan participants. The R5 share class will have 10 basis points of revenue, and the R6 class has no revenue, Edmund Murphy, Head of Defined Contribution, Putnam Investments told PLANADVISER.

“In our conversations with leading consultants and advisers, there is a growing interest in solutions that allow direct payment for all or a portion of administrative expenses,” said Murphy.  “We expect the unbundling of fees through these new share classes to be well-received by the marketplace.”

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At this time, Murphy said, Putnam has no revenue goals for these funds. They will be available to qualified retirement plans with at least $50 million in plan assets. He said expects the funds to be in the market around August.

The additional share classes will initially be offered on the Putnam funds that are most widely used among defined contribution plans, Murphy said. The filing with the SEC requires the company to specify one fund and provide disclosure language and once that is approved there will be a phased approach to adding the shares to individual funds, he commented. 

These new share classes will be available both through Putnam’s investment-only defined contribution and full-service recordkeeping businesses.    
 

Employees Not Taking Advantage of 401(k) Plan Offerings

Despite efforts by employers to educate workers on their 401(k) offering, most workers are not taking full advantage of their plans.

More than half (54%) of employers report that employees participating in plans are not taking full advantage of the investment options, features and services offered in connection with their 401(k) plan, according to a survey by Charles Schwab.

In order to better engage employees, the majority of employers plan to make as much or more extensive use of traditional outreach methods, including interactive planning tools (93%), printed educational materials (93%) and in-person workshops (81%). Only 16% of employers plan to adopt or promote personalized savings and investment management through a third-party adviser.  

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A growing number of employers are using or considering the use of automatic solutions. In total, 45% are currently auto-enrolling employees and another 25% are very or somewhat likely to do so.   

In July and August 2011, CFO Research Services conducted an online survey and gathered responses from 215 senior finance and human resources executives at U.S. companies with annual revenues of $100 million or higher.

 

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