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PRESENTERS

Nevin AdamsEditor, PLANSPONSOR

Steve AndersonSenior Vice President, Schwab Retirement Plan Services

Kevin HendersonPartner, Bradley Arant Boult Cummings LLP

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EMPLOYER VIEWS ON THE 401(K) AND FINANCIAL EDUCATION IN THE WORKPLACE

Nevin AdamsEditor, PLANSPONSOR

Steve AndersonSenior Vice President, Schwab Retirement Plan Services

Kevin HendersonPartner, Bradley Arant Boult Cummings LLP

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New study reveals HR and Finance executives’ views on impact of market downturn on their 401(k) plans and participants*

*“Getting Retirement Savings Back on Track: Employer views on the 401(k) and Financial Education in the Workplace” is a report prepared by CFO Research

in collaboration with Charles Schwab, © 2009 CFO Publishing Corp.

Reviewing your 401(k) plan? You’re not alone.

• WHEN: April-May, 2009

• AUDIENCE: 219 HR and Finance executives

• GOALS: Explore best practice management of today’s 401(k)

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Plan sponsors shared:• Elements of 401(k) plans that are vital to success• How to add value and limit costs

• How the system can be improved

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Research findings: Five themes

Employers stay the course on 401(k) plans, but look to improve

Employers agree employees need more support and a broader financial education

1

2

3

4

5

Concern with 401(k) stem from market, not system

Impact on employee productivity

Taking another look at costs

How the system can improve

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The system is largely working, with some improvements needed

Financial markets, not the system, are the issue1

56%”B”grade

32%”C”grade9%

”A”grade

3% ”D or F”grade

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Market downturn is creating a more difficult work environment

Employers see impact on employee productivity

say employee concerns over personal finances are creating a more difficult work environment

63% view

employees within five years of retirement as “very concerned” about adequacy of planning

88%

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• Movement to more conservative investments and increase in loans

• Overall - not widespread flight, most employees are staying the course

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Employers agree: Employees need more support

say that employee requests for 401(k) advice have increased since September 2008

57%

view adviceas important to provide with the plan

87% are very

satisfied with their ability to provide advice

36%

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9

62%

5-10%

10%

Schwab Advice Stats

of plan sponsors with 401(k) plans are making advice available

of participants use advice

increase in participants’ savings rates out of pay, (nearly double) with advice

Participants who receive advice are less likely to make impulsive changes based on the market

1 Charles Schwab advice stats, 2008

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An emerging need for broader financial education3

39%

66%

5%

have seen employee requests for advice beyond the 401(k) increase since September 2008

believe that offering broader financial advice is more important than a year ago

of employers currently offer broader financial education – but many employers view employee requests + productivity impact as reason to do more

Employers can play an important role in building financial literacy

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Schwab’s Rethinking Retirement research reveals :

• Americans see their workplace as a trusted source of financial guidance

• 7 out of 10 American workers would like their employer to provide broader financial advice

2 Age Wave and Schwab, Rethinking Retirement Study, 2008

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1/4 of respondents have either suspended their match or are considering doing so

Taking another look at costs4

Some employers suspend match – but many more view this negatively

But 96% report that the matching contribution is the most important feature of the retirement plan

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Other cost-saving techniques

26%

25%

19%

15%

4%

of respondents limit automatic enrollment to certain employees

offer more individualized 401(k) advice, as opposed to broader education campaigns, brochures and group meetings

increase the availability of automated services, such as e-statements

decrease employer matching contributions

change to funds with lower operating expense ratios, including index funds

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How the system can improve5

WHAT’S NEEDED:

Improved plan flexibility and greater participant resources

86% of respondents said to raise the ceiling on maximum contributions

76% agreed to make 401(k) advice more available

50% agreed to halt mandatory withdrawals for 70+ employees or they prefer to modify the rule

54% agreed to allow loans, up to limit without penalty, but cautioned the long term affect on savings

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WHAT’S NOT NEEDED:

Greater government involvement. Employers are concerned with administrative inefficiency and less control over needs of their own plan.

58% were opposed to creating a government run plan, citing this as the most negative impact for employees

70% say that a government run system would have a negative impact on employers

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IN SUMMARY:

Employers take a long term view of 401(k) plans and employee support

Both employers and employees still believe in the 401(k) system

At the same time, employees are making adjustments to portfolios and increasingly seeking advice

Employers continue to seek ways to balance plan costs

Employers are seeing an emerging need and value in providing broader financial guidance for employees

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Employees Want More Support

of

respondents say that

employee concerns over

personal finances are

affecting morale and

productivity in the workplace.

63%

87% of respondents

agree that providing

investment advice is

critical

of

respondents believe that

offering broader advice is

more important now than a

year ago.

66%

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QuestionsFor a full report and other research from Schwab, visit www.scrs.schwab.com

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Disclosures

The Charles Schwab Corporation (Charles Schwab) provides services to retirement and other benefit plans and participants as well as equity compensation plan services and

other financial and retirement services to corporations and executives through its separate but affiliated companies and subsidiaries, Schwab Retirement Plan Services, Inc.;

Schwab Retirement Plan Services Company; Charles Schwab Trust Company, a division of the Charles Schwab Bank; and Charles Schwab & Co., Inc. Brokerage products and

services are offered by Charles Schwab & Co., Inc. (Member SIPC).

©2009 Charles Schwab and/or its affiliates. All rights reserved. LAR (XX-XXXX) XXXXXX (08/09)

“Getting Retirement Savings Back on Track: Employer views on the 401(k) and Financial Education in the Workplace” is a report prepared by CFO Research in collaboration with

Charles Schwab, © 2009 CFO Publishing Corp.

1 Charles Schwab advice stats, 2008

2 Age Wave and Schwab, Rethinking Retirement Study, 2008