Edgar Filing: PRINCIPAL FINANCIAL GROUP INC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 11-K


(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2011

OR


[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to ___________________

Commission file number: 1-16725

The Principal Select Savings Plan for Employees
(Full title of the plan)


Principal Financial Group, Inc.
(Name of Issuer of the securities held pursuant to the plan)

711 High Street
Des Moines, Iowa 50392
(Address of principal executive offices) (Zip Code)

Page 1 of 22

Exhibit Index – Page 21

Report of Independent Registered Public Accounting Firm

The Benefit Plans Administration Committee

Principal Life Insurance Company

We have audited the accompanying statements of net assets available for benefits of

The Principal Select Savings Plan for Employees as of December 31, 2011 and 2010, and the related

statements of changes in net assets available for benefits for the years then ended. These financial

statements are the responsibility of the Plan’s management. Our responsibility is to express an

opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards of the Public Company Accounting

Oversight Board (United States). Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free of material misstatement.

We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our

audits included consideration of internal control over financial reporting as a basis for designing

audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we

express no such opinion. An audit also includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements, assessing the accounting principles used and

significant estimates made by management, and evaluating the overall financial statement

presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the

net assets available for benefits of the Plan at December 31, 2011 and 2010, and the changes in its net

assets available for benefits for the years then ended, in conformity with U.S. generally accepted

accounting principles.

Our audits were conducted for the purpose of forming an opinion on the financial statements taken as

a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31,

2011, is presented for purposes of additional analysis and is not a required part of the financial

statements but is supplementary information required by the Department of Labor’s Rules and

Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of

1974. Such information is the responsibility of the Plan’s management. The information has been

subjected to the auditing procedures applied in our audits of the financial statements, and in our

opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

/s/ Ernst & Young LLP

Des Moines, Iowa

June 28, 2012

Page 2 of 22

The Principal Select Savings Plan for Employees

Statements of Net Assets Available for Benefits


	December 31,
	2011	2010
Assets
Investments at fair value:
Unallocated investment options:
Guaranteed interest accounts	$ 47,258,750	$ 49,394,988
Separate accounts of insurance company	1,115,226,879	1,099,709,012
Principal Financial Group, Inc. ESOP	64,178,110	75,259,838
Total invested assets at fair value	1,226,663,739	1,224,363,838

Receivables:
Contribution receivable from Principal Life Insurance
Company	2,214	2,194
Contributions receivable from participants	3,534	3,528
Notes receivable from participants	21,503,214	19,871,117
Total receivables	21,508,962	19,876,839
Net assets available for benefits	$ 1,248,172,701	$ 1,244,240,677

See accompanying notes.

Page 3 of 22

The Principal Select Savings Plan for Employees

Statements of Changes in Net Assets Available for Benefits


	For the year ended
	December 31,
	2011	2010
Additions
Investment income:
Interest	$ 958,515	$ 1,193,796
Dividends	1,766,675	1,335,560
Net (depreciation) appreciation of investments	(25,265,101)	175,195,922
Total investment (loss) income	(22,539,911)	177,725,278

Interest income on notes receivable from participants	1,121,668	1,201,136

Contributions:
Principal Life Insurance Company	33,723,431	32,390,305
Employees	66,217,255	62,098,514
Transfers from affiliated and unaffiliated plans, net	21,649,669	–
Total contributions	121,590,355	94,488,819
Total additions	100,172,112	273,415,233

Deductions
Benefits paid to participants	95,916,377	86,214,687
Transfers to affiliated and unaffiliated plans, net	–	1,171,071
Administrative expenses	323,711	332,339
Total deductions	96,240,088	87,718,097
Net increase	3,932,024	185,697,136

Net assets available for benefits at beginning of year	1,244,240,677	1,058,543,541
Net assets available for benefits at end of year	$ 1,248,172,701	$ 1,244,240,677

See accompanying notes.

Page 4 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements

December 31, 2011

1. Significant Accounting Policies

Basis of Accounting

The accounting records of The Principal Select Savings Plan for Employees (the Plan) are

maintained on the accrual basis of accounting.

Valuation of Investments

The unallocated investment options consist of guaranteed interest accounts under a guaranteed

benefit policy (described in the Employee Retirement Income Security Act of 1974, as amended

(ERISA 401(b)) and separate accounts (described in ERISA 3(17)) of Principal Life Insurance

Company (Principal Life). The guaranteed interest accounts and separate accounts are reported at

fair value as determined by Principal Life. The Principal Financial Group Inc. Employee Stock

Ownership Plan (ESOP), which consists of common stock of Principal Financial Group, Inc., the

ultimate parent of Principal Life, is reported at fair value based on the quoted closing market

price of the stock on the last business day of the Plan year.

These unallocated investment options are non-benefit-responsive and are valued at fair value.

The guaranteed interest accounts’ fair value is the amount plan participants would receive

currently if they were to withdraw or transfer funds within the Plan prior to their maturity for an

event other than death, disability, termination, or retirement. This fair value represents

guaranteed interest account values adjusted to reflect current market interest rates only to the

extent such market rates exceed contract crediting rates. This value represents contributions

allocated to the guaranteed interest accounts, plus interest at the contractually guaranteed rate,

less funds used to pay Plan benefits and the insurance company’s administrative expenses. The

separate accounts of insurance company represent contributions invested in domestic and

international common stocks, high-quality short-term debt securities, real estate, private market

bonds and mortgages, and high-yield fixed-income securities which are slightly below

investment grade, all of which are valued at fair value.

Notes Receivable from Participants

The notes receivable from participants are reported at their unpaid principal balance plus any

accrued but unpaid interest. Interest income on notes receivable from participants is recorded

when earned.

Page 5 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

1. Significant Accounting Policies (continued)

Payment of Benefits

Benefits are recorded when paid.

Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various

risks such as interest rate, market volatility, and credit risks. Due to the level of risk associated

with certain investment securities, it is at least reasonably possible that changes in the values of

investment securities will occur in the near term and that such changes could materially affect

participants’ account balances and the amounts reported in the statements of net assets available

for benefits.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting

principles requires management to make estimates that affect the amounts reported in the

financial statements and accompanying notes and supplemental schedule. Actual results could

differ from those estimates.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (FASB) issued authoritative guidance

that clarifies and changes fair value measurement and disclosure requirements. This guidance

expands existing disclosure requirements for fair value measurements and makes other

amendments but does not require additional fair value measurements. The amendments are to be

applied prospectively and are effective for annual periods beginning after December 15, 2011.

Adoption of the guidance is not expected to have a material effect on the Plan’s net assets

available for benefits or its changes in net assets available for benefits.

In September 2010, the FASB issued authoritative guidance that requires participant loans to be

measured at their unpaid principal balance plus any accrued but unpaid interest and classified as

notes receivable from participants. Previously loans were measured at fair value and classified as

investments. The guidance was effective for fiscal years ending after December 15, 2010, and

was required to be applied retrospectively.

Page 6 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

1. Significant Accounting Policies (continued)

In January 2010, the FASB issued authoritative guidance to clarify certain existing fair value

disclosures and require a number of additional disclosures. The guidance clarified that

disclosures should be presented separately for each “class” of assets and liabilities measured at

fair value and provided guidance on how to determine the appropriate classes of assets and

liabilities to be presented. The guidance also clarified the requirement for entities to disclose

information about both the valuation techniques and inputs used in estimating Level 2 and Level

3 fair value measurements. In addition, the guidance introduced new requirements to disclose the

amounts (on a gross basis) and reasons for any significant transfers between Levels 1, 2 and 3 of

the fair value hierarchy and present information regarding the purchases, sales, issuances and

settlements of Level 3 assets and liabilities on a gross basis. This guidance was effective for

reporting periods beginning after December 15, 2009, except for the requirement to present

changes in Level 3 measurements on a gross basis, which was effective on January 1, 2011.

Since the guidance only affects fair value measurement disclosures, adoption of the guidance did

not affect the Plan’s net assets available for benefits or its changes in net assets available for

benefits.

2. Description of the Plan

The Plan is a defined contribution plan (401(k) plan) that was established January 1, 1985. The

Plan is available to substantially all employees of Principal Life or its subsidiaries (the

Company).

Information about the Plan agreement, eligibility, and benefit provisions is contained in the

Summary Plan Description. Copies of the Summary Plan Description are available from the

Benefit Administration Department or the Intranet. The Plan is subject to the provisions of

ERISA.

Contributions

On January 1, 2006, Principal Life made several changes to the retirement program. Participants

who were age 47 or older with at least ten years of service on December 31, 2005, could elect to

retain the prior benefit provisions under the qualified defined benefit retirement Plan and the

401(k) Plan and forgo receipt of the additional benefits offered by amendments to Principal

Life’s 401(k). The participants who elected to retain the prior benefit provisions are referred to as

“Grandfathered Choice Participants.”

Page 7 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

2. Description of the Plan (continued)

Matching contributions for participants other than Grandfathered Choice Participants were

increased from 50% to 75% of deferrals, with the maximum matching deferral increasing from

6% to 8%.

Vesting

Participants are eligible for immediate entry into the Plan with vesting at 100% after three years.

The funds accumulate along with interest and investment return and are available for withdrawal

by participants at retirement, termination, or when certain withdrawal specifications are met. The

participants may also obtain loans of their vested accrued benefit, subject to certain limitations

described in the Plan document. The federal and state income taxes of the participant are

deferred (except in the case of Roth deferrals) on the contributions until the funds are withdrawn

from the Plan.

Forfeitures

Upon termination of employment, participants forfeit their nonvested balances. Forfeited

balances of terminated participants’ nonvested accounts are used to reduce Company

contributions. At December 31, 2011 and 2010, forfeited nonvested account balances totaled

$43,413 and $41,454, respectively. In 2011 and 2010, employer contributions were reduced by

$1,409,750 and $1,259,764, respectively, from forfeited nonvested accounts.

Participant Loans

The Plan document provides for loans to active participants, which are considered a participant-

directed investment of his/her account. The loan is a Plan asset, but only the borrowing

participant’s account shall share in the interest paid on the loan or bear any expense or loss

incurred because of the loan. The rate of interest is 2% higher than the Federal Reserve “Bank

Prime Loan” rate at the time of the loan. The rate is set the day a loan is approved. The rate for

the loans issued in 2011 and 2010 was 5.25%. The notes receivable balance was reduced by

$1,639,866 and $1,198,838 in 2011 and 2010, respectively, for terminated participants that

received their account balance, net of the outstanding loans, as a benefit distribution.

Page 8 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

2. Description of the Plan (continued)

Plan Termination

Although it has not expressed any intent to do so, the Company has the right under the Plan to

discontinue its contributions at any time and to terminate the Plan subject to the provisions of

ERISA. In the event the Plan terminates, participants will become fully vested in their accounts.

3. Income Tax Status

The Plan has received a determination letter from the Internal Revenue Service (the IRS) dated

February 28, 2003, stating that the Plan is qualified under Section 401(a) of the Internal Revenue

Code (the Code) and, therefore, the related trust is exempt from taxation. Subsequent to this

determination by the IRS, the Plan was amended and restated. The Plan is required to operate in

conformity with the terms of the Plan document and the Code to maintain its qualification. The

Benefit Plans Administration Committee (BPAC) and the Plan sponsor intend to operate the Plan

in conformity with the provisions of the Plan document and the Code. BPAC and the Plan

sponsor acknowledge that inadvertent errors may occur in the operation of the Plan. If such

inadvertent errors occur, BPAC and the Plan sponsor represent that they will take the necessary

steps to bring the Plan’s operations into compliance with the Code, including voluntarily and

timely correcting such errors in accordance with procedures established by the IRS.

Accounting principles generally accepted in the United States require plan management to

evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax

position are recognized when the position is more likely than not, based on the technical merits,

to be sustained upon examination by the IRS. The plan administrator has analyzed the tax

positions taken by the Plan and has concluded that as of December 31, 2011, there are no

uncertain positions taken or expected to be taken. The Plan has recognized no interest or

penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing

jurisdictions. The IRS commenced examination of the Plan for 2008 in August 2010. The plan

administrator believes it is no longer subject to income tax examinations for years prior to 2008.

Page 9 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

4. Investments

Contributions are invested in unallocated guaranteed interest accounts supported by the general

account of insurance company (a pooled account invested primarily in fixed income securities

having a range of maturities); in separate accounts of insurance company, the portfolios of which

are primarily invested in domestic and international common stocks, high-quality short-term debt

securities, real estate, private market bonds and mortgages, and high-yield fixed-income

securities which are slightly below investment grade, as appropriate for each separate account;

and The Principal Financial Group, Inc. ESOP, which consists of common stock of Principal

Financial Group, Inc., the ultimate parent of Principal Life. Participants elect the investment(s) in

which to have their contributions invested.

The following presents individual investments that represent 5% or more of the Plan’s net assets

available for benefits in 2011 and 2010. Principal Life is a party in interest with respect to these

investments.


	December 31
	2011	2010

Large-Cap Stock Index Separate Account	$ 137,100,940	$ 138,471,505
Bond and Mortgage Separate Account	93,377,684	85,247,318
Diversified International Separate Account	87,900,476	100,006,483
U.S. Property Separate Account	84,204,454	68,032,089
Small-Cap Stock Index Separate Account	76,322,736	79,740,461
Medium Company Blend Separate Account	75,486,540	68,704,871
International Emerging Markets Separate Account	74,216,829	94,948,394
Money Market Separate Account	67,176,915	63,699,465
Principal Financial Group, Inc. ESOP	64,178,110	75,259,838

Page 10 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

4. Investments (continued)

During 2011 and 2010, the Plan’s investments that are related to Principal Life (depreciated)

appreciated in value by $(25,265,101) and $175,195,922, respectively, as follows:


	For the year ended
	December 31,
	2011	2010

Guaranteed interest accounts	$ 199,283	$ 94,260
Separate accounts of insurance company	(6,971,359)	153,693,987
Principal Financial Group, Inc. ESOP	(18,493,025)	21,407,675
	$ (25,265,101) $ 175,195,922

5. Fair Value of Financial Instruments

Valuation Hierarchy


Fair value is defined as the price that would be received to sell an asset in an orderly transaction
between market participants at the measurement date (an exit price). The fair value hierarchy
prioritizes the inputs to valuation techniques used to measure fair value into three levels.

•	Level 1 – Fair values are based on unadjusted quoted prices in active markets for
	identical assets. Our Level 1 assets include the Principal Financial Group, Inc. ESOP.

•	Level 2 – Fair values are based on inputs other than quoted prices within Level 1 that are
	observable for the asset, either directly or indirectly. Our Level 2 assets are separate
	accounts of insurance company and are reflected at the net asset value (NAV) price.

•	Level 3 – Fair values are based on significant unobservable inputs for the asset. Our
	Level 3 assets are guaranteed interest accounts of the insurance company.

Transfers between fair value hierarchy levels are recognized at the beginning of the reporting
period.




	Page 11 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

5. Fair Value of Financial Instruments (continued)

Determination of Fair Value

The following discussion describes the valuation methodologies used for assets measured at fair

value on a recurring basis. The techniques utilized in estimating the fair values of financial

instruments are reliant on the assumptions used. Care should be exercised in_.deriving

conclusions based on the fair value information of financial instruments presented below.

Fair value estimates are made at a specific point in time, based on available market information

and judgments about the financial instrument. Such estimates do not consider the tax impact of

the realization of unrealized gains or losses. In addition, the disclosed fair value may not be

realized in the immediate settlement of the financial instrument. There were no significant

changes to the valuation processes during 2011.

Guaranteed Interest Accounts

The guaranteed interest accounts cannot be sold to a third-party, thus, the only option to exit the

guaranteed interest accounts is to withdraw the funds prior to maturity. The fair value of the

account is the value paid when funds are withdrawn prior to their maturity. The fair value of the

guaranteed interest accounts is reflected in Level 3 and the valuation is based on the applicable

interest rate. If the applicable interest rate is greater than the interest rate on the account, the fair

value is the contract value reduced by a percentage. This percentage is equal to the difference

between the applicable interest rate and the interest rate on the account, multiplied by the

number of years (including fractional parts of a year) until the maturity date. If the applicable

interest rate is equal to or less than the interest rate on the account, the fair value is equal to the

contract value.

Separate Accounts of Insurance Company

This category is designed to deliver safety and stability by preserving principal and accumulating

earnings. The NAV of each of the separate accounts is calculated in a manner consistent with

U.S. GAAP for investment companies and is determinative of their fair value and represents the

price at which the Plan would be able to initiate a transaction. As of December 31, 2011, all

separate accounts are reflected in Level 2. Several of the separate accounts invest in publicly

quoted mutual funds or actively managed stocks. Some of the separate accounts also invest in

fixed income securities. The fair value of the underlying mutual funds or stock and of the

underlying securities, which is based on quoted prices of similar assets, is used to determine the

Page 12 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

NAV of the separate account which is not publicly quoted. There are currently no redemption

restrictions on these investments.

5. Fair Value of Financial Instruments (continued)

One separate account invests in real estate. The fair value of the underlying real estate is

estimated using discounted cash flow valuation models that utilize public real estate market data

inputs such as transaction prices, market rents, vacancy levels, leasing absorption, market cap

rates and discount rates. In addition, each property is appraised annually by an independent

appraiser. In 2010, this was categorized as Level 3, as the fund had restrictions on redemption of

NAV at the measurement date. In 2011, the withdrawal limitations associated with this separate

account were removed and the investments were being redeemed at NAV at the measurement

date. Therefore, the fair value of the separate account is based on NAV and is considered a Level

2 asset in 2011.

Principal Financial Group, Inc. ESOP

The Principal Financial Group, Inc. ESOP, which consists of common stock of Principal

Financial Group, Inc., the ultimate parent of Principal Life, is reported at the quoted closing

market price on the last business day of the Plan year and is reflected in Level 1.

Assets Measured at Fair Value on a Recurring Basis

Assets measured at fair value on a recurring basis are summarized below.


	As of December 31, 2011
	Assets Measured at	Fair Value Hierarchy Level
	Fair Value	Level 1	Level 2		Level 3
Assets
Guaranteed interest accounts	$ 47,258,750	$ –	$ –	$ 47,258,750
Separate accounts of insurance company:
Fixed income security	124,687,109	–	124,687,109		–
Lifetime balanced asset allocation	179,567,565	–	179,567,565		–
Large U.S. equity	251,562,353	–	251,562,353		–
Small/Mid U.S. equity	237,842,809	–	237,842,809		–
International equity	162,117,305	–	162,117,305		–
Short-term fixed income	67,176,915	–	67,176,915		–
U.S. real estate	84,204,454	–	84,204,454		–
Other	8,068,369	–	8,068,369		–
Principal Financial Group, Inc. ESOP	64,178,110	64,178,110	–		–
Total invested assets	$ 1,226,663,739	$ 64,178,110	$ 1,115,226,879	$ 47,258,750

Page 13 of 22


The Principal Select Savings Plan for Employees


Notes to Financial Statements (continued)




5. Fair Value of Financial Instruments (continued)

			As of December 31, 2010
	Assets Measured at		Fair Value Hierarchy Level
	Fair Value		Level 1	Level 2		Level 3
Assets
Guaranteed interest accounts	$ 49,394,988	$ –		$ –	$ 49,394,988
Separate accounts of insurance company:
Fixed income security	105,258,341		–	105,258,341		–
Lifetime balanced asset allocation	169,747,870		–	169,747,870		–
Large U.S. equity	247,657,740		–	247,657,740		–
Small/Mid U.S. equity	238,768,265		–	238,768,265		–
International equity	194,954,877		–	194,954,877		–
Short-term fixed income	63,699,465		–	63,699,465		–
U.S. real estate	68,032,089		–	–		68,032,089
Other	11,590,365		–	11,590,365		–
Principal Financial Group, Inc. ESOP	75,259,838		75,259,838	–		–
Total invested assets	$ 1,224,363,838	$ 75,259,838		$ 1,031,676,923	$ 117,427,077

Changes in Level 3 Fair Value Measurements

The reconciliation for all assets and liabilities measured at fair value on a recurring basis using

significant unobservable inputs (Level 3) for the years ended December 31, 2011 and 2010, are

as follows:


			For the year ended December 31, 2011					Changes in Unrealized Gains (Losses) Included in Statements of Changes in Net Assets Available for Benefits Relating to Positions Still Held

		Total Realized/ Unrealized Appreciation (Depreciation)					Ending Asset Balance as of December 31, 2011
	Beginning Asset Balance as of January 1, 2011					Transfers in (Out) of Level 3

			Purchases**	Sales**
Assets
Guaranteed interest
accounts	$ 49,394,988	$1,157,794	$15,425,612	$(18,719,644)	$ –		$ 47,258,750	$ 199,283
U.S. real estate	68,032,089	–	–	-		(68,032,089)	–	–
Total	$ 117,427,077	$1,157,794	$15,425,612	$(18,719,644)		$(68,032,089)	$ 47,258,750	$ 199,283

Page 14 of 22


	The Principal Select Savings Plan for Employees


	Notes to Financial Statements (continued)




5. Fair Value of Financial Instruments (continued)


		For the year ended December 31, 2010					Changes in Unrealized Gains (Losses) Included in Statements of Changes in Net Assets Available for Benefits Relating to Positions Still Held
		Total Realized/ Unrealized Appreciation (Depreciation)				Ending Asset Balance as of December 31, 2010
	Beginning Asset Balance as of January 1, 2010				Transfers in (Out) of Level 3

			Purchases**	Sales**
Assets
Guaranteed interest
accounts	$ 51,968,974	$ 1,288,052	$ 17,582,015	$ (21,444,053)	$ –	$ 49,394,988	$ 94,260
U.S. real estate	70,014,680	10,084,871	10,962,867	(23,030,329)	–	68,032,089	9,717,904
Total	$ 121,983,654	$ 11,372,923	$ 28,544,882	$ (44,474,382)	$ –	$ 117,427,077	$ 9,812,164

**Includes interest, contributions, transfers from affiliated and unaffiliated plans, transfers to other investments via participant direction,

benefits paid to participants, and administrative expenses.

6. Contingencies

Until March 25, 2011, the real estate separate account had a temporary withdrawal limitation

related to past turmoil in the credit markets that resulted in a sharp slowdown in the sale of

commercial real estate assets over the last several years. The uncertain environment led to

significantly increased requests for withdrawals. To allow for orderly administration and

management benefiting all separate account investors, Principal Life implemented a pre-existing

contractual limitation to delay withdrawal requests for the real estate separate account. Certain

high need payments, such as death, disability, certain eligible retirements, and hardship

withdrawals, were not subject to the withdrawal limitation. Other withdrawal requests were

subject to the limitation until certain liquidity levels were achieved, mainly via proceeds from

sales of underlying properties, rents from tenants and new investor contributions. With the

inception of the withdrawal limitation, all sources of cash were first used to satisfy cash

requirements at the properties, meet debt maturities, maintain compliance with debt covenants

and meet upcoming separate account obligations. Outstanding withdrawal requests were paid in

multiple payments. Except for certain de minimis payments, payments were made

proportionately among all other outstanding withdrawal requests, based upon available liquidity.

All withdrawals are being transacted at the NAV price at the date of distribution. The restriction

had been in place since September 26, 2008 and ended on March 25, 2011.

Page 15 of 22

The Principal Select Savings Plan for Employees

Notes to Financial Statements (continued)

6. Contingencies (continued)

While the outcome of any future litigation or regulatory matter cannot be predicted, management

does not believe that any future litigation or regulatory matter will have a material adverse effect

on our net assets available for benefits. The outcome of such matters is always uncertain, and

unforeseen results can occur. It is possible that such outcomes could materially affect net assets

available for benefits in a particular year.

7. Related Party Transactions

In addition to the transactions with parties-in-interest discussed in Notes 2, 4, and 5, Principal

Life provides recordkeeping services to the Plan and receives fees, which are paid through

revenue generated by Plan investments, for those services. These transactions are exempt from

the prohibited transactions rules of ERISA. Principal Life may pay other Plan expenses from

time to time.

8. Form 5500

Certain line items of net asset additions and deductions in the 2011 and 2010 Forms 5500 differ

from similar classifications in the accompanying financial statements. However, such differences

are not considered material and create no differences in net asset balances at December 31, 2011

and 2010.

Page 16 of 22


The Principal Select Savings Plan for Employees

EIN: 42-0127290	Plan Number: 003

Schedule H, Line 4i – Schedule of Assets
(Held at End of Year)

December 31, 2011


Identity of Issue	Description of Investment	Current Value

Principal Life Insurance
Company*	Deposits in guaranteed interest accounts	$ 47,258,750

Principal Life Insurance Deposits in insurance company Small-Cap Value II
Company*	Separate Account	15,170,635

Principal Life Insurance Deposits in insurance company Large Company
Company*	Growth Separate Account	40,450,681

Principal Life Insurance Deposits in insurance company Money Market
Company*	Separate Account	67,176,915

Principal Life Insurance Deposits in insurance company U.S. Property
Company*	Separate Account	84,204,454

Principal Life Insurance Deposits in insurance company Bond and Mortgage
Company*	Separate Account	93,377,684

Principal Life Insurance Deposits in insurance company Diversified
Company*	International Separate Account	87,900,476

Principal Life Insurance Deposits in insurance company Large-Cap Stock
Company*	Index Separate Account	137,100,940

Principal Life Insurance Deposits in insurance company Government and High
Company*	Quality Bond Separate Account	20,878,593

Principal Life Insurance Deposits in insurance company Medium Company
Company*	Blend Separate Account	75,486,540

Page 17 of 22


The Principal Select Savings Plan for Employees

	EIN: 42-0127290	Plan Number: 003

Schedule H, Line 4i – Schedule of Assets
(Held at End of Year) (continued)

Identity of Issue	Description of Investment		Current Value

Principal Life Insurance Deposits in insurance company International
Company*	Emerging Markets Separate Account		$ 74,216,829

Principal Life Insurance Deposits in insurance company Large Company
Company*	Value Separate Account		16,739,528

Principal Life Insurance Deposits in insurance company Inflation Protection
Company*	Separate Account		10,430,832

Principal Life Insurance Deposits in insurance company Partner Large-Cap
Company*	Growth I Separate Account		20,119,304

Principal Life Insurance Deposits in insurance company Lifetime Strategic
Company*	Income Separate Account		7,535,449

Principal Life Insurance Deposits in insurance company Partner Mid-Cap
Company*	Growth Separate Account		36,057,323

Principal Life Insurance Deposits in insurance company Partner Small-Cap
Company*	Growth I Separate Account		34,805,575

Principal Life Insurance Deposits in insurance company Small-Cap Stock
Company*	Index Separate Account		76,322,736

Principal Life Insurance Deposits in insurance company Equity Income
Company*	Separate Account		37,151,900

Principal Life Insurance Deposits in insurance company Principal Financial
Company*	Group, Inc. Stock Separate Account		8,068,369

Page 18 of 22


The Principal Select Savings Plan for Employees
	EIN: 42-0127290	Plan Number: 003

Schedule H, Line 4i – Schedule of Assets
(Held at End of Year) (continued)

Identity of Issue	Description of Investment		Current Value

Principal Life Insurance Deposits in insurance company Lifetime 2010
Company*	Separate Account		$ 10,462,959

Principal Life Insurance Deposits in insurance company Lifetime 2020
Company*	Separate Account		43,325,854

Principal Life Insurance Deposits in insurance company Lifetime 2030
Company*	Separate Account		51,828,956

Principal Life Insurance Deposits in insurance company Lifetime 2040
Company*	Separate Account		40,623,253

Principal Life Insurance Deposits in insurance company Lifetime 2050
Company*	Separate Account		25,791,094

Principal Financial	2,608,866 shares of Principal Financial Group, Inc.
Group, Inc.*	ESOP		64,178,110

Loans to participants*	Notes receivable from participants with interest rates
	ranging from 5.25% to 10.50%		21,503,214
			$1,248,166,953

*Indicates party in interest to the Plan.

Page 19 of 22


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the administrator of The
Principal Select Savings Plan for Employees has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.

	THE PRINCIPAL SELECT SAVINGS PLAN FOR
	EMPLOYEES
	by Benefit Plans Administration Committee



Date: June 28, 2012	By /s/ Tammy DeHaai
	Tammy DeHaai
	Committee Member




	Page 20 of 22


Exhibit Index

The following exhibit is filed herewith:

		Page

23	Consent of Ernst & Young LLP	22




		Page 21 of 22

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8, No. 333-

178510) pertaining to The Principal Select Savings Plan for Employees of Principal Financial

Group, Inc. of our report dated June 28, 2012, with respect to the financial statements and

supplemental schedule of The Principal Select Savings Plan for Employees included in this

Annual Report (Form 11-K) for the year ended December 31, 2011, filed with the Securities and

Exchange Commission.

/s/ Ernst & Young, LLP

Des Moines, Iowa

June 28, 2012

Page 22 of 22