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Making Your Choices Presentation Title Date Mercer Employee Benefits Limited is authorised and regulated by the Financial Services Authority. Registered in England No. 404370. Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU. © Copyright Mercer Employee Benefits Limited 2007 What I/we will cover today Reminder of the changes Deciding how much to contribute What do you need to consider about investments The investment funds The next steps Questions and answers Mercer Employee Benefits Limited 2 A brief summary of the changes Pension benefits build up through Investor Plan from 01/01/2008 on enhanced basis Pensions benefits built up before 01/01/2008 are protected and will increase The Company will pay off the deficits From 01/01/2008 you will no longer build up a pension from the Defined Benefit section of the Siemens Benefit Scheme Death in service and ill health benefits protected at minimum of current amount for next 5 years Mercer Employee Benefits Limited 3 How does defined contribution work? Mercer Employee Benefits Limited 4 Contributions Mercer Employee Benefits Limited 5 The types of contribution Contribution type Company match Tax relief NI saving Flexibility to change Matched × EDC × × AVC × × Mercer Employee Benefits Limited 6 Deciding how much to contribute What can you afford to pay? Maximising the Company match The earliest you can access your savings is age 50 (55 from 6th April 2010) What are your other assets? When do you want to retire? Mercer Employee Benefits Limited 7 Mercer Employee Benefits Limited 8 Mercer Employee Benefits Limited 9 Mercer Employee Benefits Limited 10 Mercer Employee Benefits Limited 11 Investment Basics Mercer Employee Benefits Limited 12 Investment risk Investment risk is the chance that your investment will be lower than you expect Savings Risk Volatility Risk Inflation Risk Mercer Employee Benefits Limited 13 Investment choices Equities, bonds and cash are the building blocks of most investments Equities Bonds Cash Also known as ‘stocks and shares’, equities represent part ownership of a company, including its earnings and assets Also known as ‘gilts’ when issued by the UK Government, bonds represent loans to companies or governments that are repaid with interest to investors over time Cash investments offer the most security but may not grow fast enough to keep pace with inflation Mercer Employee Benefits Limited 14 Investment choices High Return Equity Bonds Cash Low Return Low Risk High Risk Please note: Any statement of past performance of any particular fund is not a guide to future performance. Also investments/funds denominated in a foreign currency will fluctuate with the value of the currency and any income from foreign investments will fluctuate in value. Mercer Employee Benefits Limited 15 Inflation risk Projections are based on Market Interest Rate Expectations. Source – Bank of England, CPI Fan Chart - May 2007 Mercer Employee Benefits Limited 16 The road to retirement Consider how long you have until retirement… This graphic is not intended to recommend a specific course of action for you. Each person would have to consider their own attitude to risk in the context of their overall retirement and private financial planning. Mercer Employee Benefits Limited 17 Passive or Active Passive (Index-tracker) Aims to track the performance of the market (even when it falls) Reduces risk of performing less well than a market Investment management fees are lower Active-management: Aims to outperform the market Potentially better returns than Index Tracker but risk that could do worse Investment management fees are higher Mercer Employee Benefits Limited 18 The equity funds Mercer Employee Benefits Limited 19 Property, bonds and cash Mercer Employee Benefits Limited 20 Specialist funds Mercer Employee Benefits Limited 21 Lifestyle Strategy Private Fund Fixed Annuity Target Cash Mercer Employee Benefits Limited 22 The next steps Sign and return ‘Employment Contract Amendment’ forms and return by 24th October 2007 My choice enrolment process (details sent out in last week of October): Decide how much to pay Choosing where to invest (‘Lifestyle’ or ‘Freestyle’) If select ‘Freestyle’, additional form issued in first week of December Mercer Employee Benefits Limited 23 Mercer Employee Benefits Limited is authorised and regulated by the Financial Services Authority. Registered in England No. 404370. Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU. © Copyright Mercer Employee Benefits Limited 2007 Mercer Employee Benefits Limited 25 Mercer Employee Benefits Limited 26 Remember, if you select the same contribution rate your take-home pay will go down Mercer Employee Benefits Limited 27 Mercer Employee Benefits Limited 28 Mercer Employee Benefits Limited 29 Additional Support Available? Helpdesk: email: [email protected]; external tel: 0845 6039972; internal tel: x5555 – option 6 Calculators and modellers Pensions modeller: http://siemens.pensionline.org Contributions calculator: http://intranet.css.siemens.co.uk/pensions IFA Advice: First £200 reimbursed, claim form returned by 30th November 2007 Mercer Employee Benefits Limited 30 Your questions Mercer Employee Benefits Limited 31