The Principal Financial Group(R), the nation's 401(k) leader and total retirement solutions innovator, praised Rep. Rob Andrews (D-NJ) on the introduction of his pension reform bill, "The Retirement Enhancement Revenue Act of 2004." In particular, The Principal(R) hailed the provision in the legislation that would make possible the creation of a DB(k) - a hybrid combination of a traditional defined benefit plan and a 401(k) defined contribution plan.

The DB(k) is a concept developed by The Principal and the American Society of Pension Actuaries (ASPPA). Legislative aides to Congressman Andrews - ranking Democrat on the House Education and the Workforce's Employer-Employee Relations Subcommittee - have been closely involved in the evolution of this unique retirement savings proposal, which has been nearly six years in the making.

"The DB(k) is essentially a defined benefit pension plan with 401(k) features but without the complexities of a traditional pension plan," said Larry Zimpleman, president, Retirement and Investor Services, at The Principal. "Because of the unique structure of the DB(k), current laws governing retirement plans - the federal tax code and the Employee Retirement Income Security Act (ERISA) - must be changed. Congressman Andrews' legislation will remove much of the red tape that has prevented employers - especially small- and medium-size organizations - from offering pension plans to their workers. We look forward to Rep. Andrews reintroducing his bills in the new 109th Congress next year and urge the appropriate House committees to conduct prompt and thorough hearings."

Rep. Andrews introduced two bills (H.R. 5397 and 5398) which address pension reform on November 19, in the waning days of the 108th Congress. The Congressional ERISA expert submitted the legislation - one which amends ERISA and the other the tax code - in order to generate comment and public reaction from pension and retirement experts. He is expected to reintroduce these measures early in 2005. The Principal and the ASPPA are also collaborating to secure a Senate sponsor of the DB(k) pension reform legislation.

"The DB(k) is an innovative, consumer-friendly initiative that will make it easier and more affordable for employers to offer a comprehensive retirement program that will provide a dependable source of retirement income for American workers," Zimpleman said. "The DB(k) provides employers with an important way to retain valued long-term employees and to attract new talent by offering two of the most desired retirement programs. We applaud Congressman Andrews for his vision and leadership in advocating the DB(k) concept."

"The Principal has long worked with policymakers in Washington - in Congress and in the Executive Branch - to develop concepts that will encourage more employers to offer the security of defined benefit pensions to their employees. The DB(k) is an important step in that direction. In fact, the DB(k) concept had its genesis in discussions with PBGC leaders over six years ago," said Stuart Brahs, vice president, federal government relations, The Principal. "As an advocate for retirement security, The Principal will continue its leadership position in promoting the DB(k) proposal to federal lawmakers."

For details about proposed features of the DB(k) go to The Principal Research Center, http://www.principal.com/about/news/research.htm

About the Principal Financial Group

The Principal Financial Group(R) (The Principal (R))(1) is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $156.0 billion in assets under management(2) and serves some 14.7 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.

(1) "The Principal Financial Group(R)" and "The Principal(R)" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.

(2) As of September 30, 2004.