PGIM RETIREMENT SPENDING PORTFOLIOS

INVESTMENT OBJECTIVE

Our set of three PGIM Retirement Spending Portfolios—designed for individuals near and in retirement—seeks to provide a unique balance by mitigating the risk of equity market volatility and inflation while offering the opportunity for growth. Retirees’ spending needs change year by year, and capital markets change as well, impacting how much a retiree can safely expect to spend in retirement. Our portfolios are designed to address varying levels of spending flexibility – conservative, moderate, and enhanced.

The Conservative portfolio is intended for investors who are generally less well funded and are dependent on retirement plan savings to fund essential spending in retirement.

The Moderate portfolio is intended for investors who may use retirement plan savings for some of their essential spending needs but have access to other sources of secure income that allows them some flexibility.

The Enhanced portfolio is intended for investors who have other sources of secure income in retirement (like a defined benefit plan) and have significant flexibility around their retirement savings.

INVESTMENT PHILOSOPHY

PGIM DC Solutions’ philosophy is that most individuals are best served by making saving and investing for retirement simple, while recognizing the need to provide more personalized solutions during the decumulation years that account for retirees’ diverse situations and preferences. The risks that retirees face in retirement are different than the risks faced by individuals during their savings and wealth-building years. Furthermore, the spending needs of retirees are unique and dynamic in nature, requiring a more holistic and sophisticated asset/liability approach to managing retiree assets.  To address these risks, we believe it’s important to have a thoughtful mix of traditional and non-traditional asset classes, active and passive management, and inflation-hedging investments. 

Key features of the PGIM Retirement Spending Portfolios are as follows.

The risks faced by retirees are likely different from those who are still working.

In addition to allocating to traditional asset classes, the strategies allocate to the following non-traditional asset classes that help better mitigate the risks of inflation, equity market volatility, and the longevity of retirement assets for those approaching retirement.

These asset classes include:

  • Commodities
  • Real estate
  • Global infrastructure

As participants near retirement, their financial pictures can vary greatly. A more customized approach, that is focused specifically on each participant's unique retirement spending needs and sources of income can improve retirement outcomes.

  • Spending - While some participants rely on DC plan savings to cover all of their essentials or “Needs” in retirement, others may be able to use plan savings on a variety of non-essential items or “Wants”
  • Sources of income - Some participants may have secure income (like a defined benefit plan) to cover their Needs in retirement, while others with less secure income have less flexibility around how to spend DC plan savings

By allocating to passive underlying strategies in more efficient asset classes, while remaining active where we can more efficiently deliver potential alpha, the PGIM Retirement Spending Portfolios aim to keep expenses low.

To learn more about the PGIM Retirement Spending Portfolios, please contact a member of our team.

About the strategies: The PGIM Retirement Spending strategies aim to accommodate individual spending goals according to different risk profiles. The PGIM Conservative Retirement Spending strategy may be appropriate for investors who are near or in retirement who are looking to fund essential and flexible spending in retirement with an emphasis on essential spending. The PGIM Moderate Retirement Spending strategy may be appropriate for investors who are near on in retirement who are looking to fund a balance between essential and flexible spending in retirement. The PGIM Enhanced Retirement Spending strategy may be appropriate for investors who are near on in retirement who are looking to fund a balance between essential and flexible spending in retirement with an emphasis on flexible spending.

Strategy objective: The PGIM Retirement Spending strategies seek a balance between growth and conservation of capital. The strategies seek to achieve their investment objectives by investing primarily in mutual funds and ETFs that invest in fixed income and equity securities and non-traditional asset classes.

Strategy risks: Each portfolio invests primarily in mutual funds and exchange-traded funds (“ETFs”) (collectively, the “Underlying Funds”). The value of an investment in the portfolios will be related, to a degree, to the investment performance of the Underlying Funds in which it invests. PGIM DC Solutions will primarily use PGIM Investments managed mutual funds/ETFs in the PGIM Retirement Spending Portfolios unless there is no affiliated fund consistent with the desired asset allocation or if in the firm's discretion a different unaffiliated fund is preferred. For additional information regarding the risks and expenses associated with each of the underlying funds included in the portfolios, please refer to each fund’s Prospectus and Statement of Additional Information. The principal risks of investing in the portfolios are closely related to the principal risks associated with these Underlying Funds and their investments including, but not limited to, risks relating to derivative securities, which may carry market, credit, and liquidity risks, as well as hedging risks; commodities which may be speculative and their values are affected by events that might have less impact on the value of stocks and bonds; foreign securities, which are subject to currency fluctuation and political uncertainty and may also be less liquid than US stocks and bonds; and emerging market securities, which are subject to greater volatility and price declines. The portfolios may invest in equity and equity-related securities, where the value of a particular security could go down resulting in a loss of money; mortgage-backed and asset-backed securities, which may become more volatile if interest rates rise; real estate investment trusts (REITs), which are subject to the same risks as direct investments in real estate and mortgages; and debt obligations, U.S. government and agency securities, which are subject to market risk, interest rate risk and credit risk. It is possible that a conflict of interest among the portfolios and the Underlying Funds could affect how the Manager and subadviser fulfill their fiduciary duties to the portfolios and the Underlying Funds. As actively managed strategies, the portfolios are subject to management risk, as well as market risks, in that the value of investments may decrease and securities markets are volatile; asset allocation risk, in that the portfolios have partial exposure to the risks of many different areas in the market; asset class variation risk, in which the Underlying Funds investments in the securities constituting their asset class may vary (subject to any applicable regulatory requirements); economic and market events risk and market disruption and geopolitical risks, which could negatively impact performance; market capitalization risk, in that certain Underlying Funds may invest in stocks of small- and medium-size companies which may present above-average risks. As new and relatively small strategies, the strategy performance may not represent how each strategy is expected to or may perform in the long-term. There is no guarantee each strategy’s objective will be achieved.

These materials are for informational or educational purposes. In providing these materials, PGIM is not acting as your fiduciary and is not giving advice in a fiduciary capacity. The information contained herein is provided on the basis and subject to the explanations, caveats and warnings set out in this notice and elsewhere herein. Any discussion of risk management is intended to describe the PGIM’s efforts to monitor and manage risk but does not imply low risk. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. These materials do not purport to provide any legal, tax or accounting advice. These materials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation.

Investment products are distributed by Prudential Investment Management Services LLC, member FINRA and SIPC. PGIM Investments is a registered investment advisor and investment manager to PGIM registered investment companies. PGIM DC Solutions is a registered investment advisor. All are Prudential Financial affiliates.

PGIM DCS - 4396658