University of Reading Pension Scheme (URPS) Steve Langmead 28 June 2013 Note: We cannot provide individual financial planning advice

University of Reading Pension Scheme (URPS) 2 What you need to think about 1.How can I plan for my retirement? 2.How do my pensions work? 3.How much should I pay? 4.Where should I invest? 5.Your Investment Options - Lifestyle or Self Select 6.What about my other pensions? 7.Future help It is important to emphasise that we are not making any personal recommendations during this presentation

How can I plan for my retirement?

“Retirement Plan - why do I need one?” WorkingRetired Based on a gross salary of £24,000 FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION 4

Full Basic State pension 2013/14 - payable at age 65? ►You need 30 “qualifying years” e.g. paid or credited with National Insurance Contributions (NICs) ►Single person:£ per week (£5,730 per annum) ►Married couple:£ per week (£9,160 per annum) State Second Pension (S2P) from 2002 ►Previously SERPS ►Earnings and qualifying years related ►Typical benefit £1,000 - £2,000 pa Flat Rate State Pension from 2016 ►£144 per week ►You will need 35 years “qualifying years” of NI contributions Source: State pensions 5 You can apply for a State Pension Forecast at

So how do I fill the gap? 1.Know what you need 2.Know what you’ve got 3.Think about what you can change a)How much should I pay? b)Where should I invest? c)What about my other pensions? d)When can I retire? FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION 6

How the URPS works

8 University of Reading Pension Scheme (URPS) Company & Employee Contributions paid into account administered by BlackRock How much to save and where to invest is member’s decision

How much should I pay?

Contribution table based on percentage of salary “How much is paid into my Retirement Account?” 10 Scheme service You pay Employer pays Total 0 to 59 months 4%5% 9% 60 months or more4%7% 11% (You can pay more than 4%) plus Life Assurance of 6 x’s annual basic salary

“How much is paid into my Retirement Account? Your Account £180 pm You £64 pm (4% net) £16 pm Based on £24,000 annual basic salary £100 pm (5%) UoR 11 Plus Nat Ins saving 12% x £80 = £9.60 pm Take home pay reduces by £54.40 pm for a £180 pm contribution

Pension benefits Pension income from URPS & Any other Pension Plans Full Basic State Pension (approx. £5,730 pa) Additional State Pension (SERPS and/or S2P) 12 OR £7,500 pa (£144 pw) Flat Rate State Pension

Taking benefits at retirement Regular income Tax free cash (25% x Account Value) Minimum age of 55 before you can take benefits 13

£4,490 per year £3,050 per year Joint Life 50% Spouse’s level pension Joint Life 50% Spouse’s pension escalating at 5% pa Recent annuities at age 65 on £100,000 £5,050 per year Single Life level pension Assumed non-smoker, pension paid for 5 years guaranteed, spouse 3 years younger Illustrative annuity rates only – rates constantly change From 21 December 2012 annuity rates are the same for men & women FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION 14 Source: The Open Market Annuity Service 27 December 2012

Where should I invest?

The four main types of pension funds Fixed Interest (Bonds) Money held on deposit and short-term money market instruments to which interest is added Cash Shares in a company Equities Equities / Bonds / Cash / Alternatives Multi-Asset (Diversified) Loans issued by governments (UK – Gilts) Loans issued by corporations (Bonds) 16

Long term returns versus inflation 17 Original investment of £100 on 31 December 1972 to 31 December 2012, gross income reinvested except property price performance. Adjusted for cost of living. All property data is using the UK Nationwide House Price Index EquitiesGiltsCashProperty Rebased to 100 (%) Retiring now? GBP £ £697 £454 £200 £ Gross Total Return (Adjusted for Cost of Living) Source: Barclays Equity Gilt Study, Datastream - Nationwide UK House price Index

Your Investment Options Lifestyle or Self Select

Lifestyle Option Growth Phase Switching Phase Retirement (TRA 65) TRA = Target Retirement Age 19

20 Self Select Fund Type Fee p.a. Active / Deferred member 6 DC Aquila (30:70) Global Index* 100% equities (30% UK / 70% O/Seas) 0.47% / 0.72% 5 HSBC Amanah 100% equities (Shariah compliant) 0.65% / 0.95% 4 DC Diversified Growth* Multi-assets (cash + 4.5%) 0.85% / 1.17% ( Equities / Bonds / Cash / Alternatives ) 2 DC Pre-Retirement* 100% bonds ( 50% Gilts / 50% Corps ) 0.50% / 0.75% 2 DC Aquila >5 yr Gilt Index 100% bonds ( Index Linked Gilts only ) 0.45% / 0.70% 1 DC Cash* 100% money market instruments 0.30% / 0.65% Investment Risk * Funds included in the Lifestyle Option

What about my other pensions?

Should I transfer my pension benefits? What you need to think about What type of pension is it?  Defined Benefit (“Final Salary”) Scheme: Pension based on your final salary and the number of years you belonged to scheme Typically linked to inflation Scheme responsibility to ensure sufficient funds to pay benefits Transfer based on cash equivalent value MUST TAKE ADVICE FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION 22

Should I transfer my pension benefits? What type of pension is it?  Defined Contribution Scheme: Pension based on your accumulated fund at retirement Can leave fund where it is or transfer to another arrangement If you are thinking of transferring: –Check any guarantees – for example, guaranteed annuity rates –Check any exit charges: some personal pensions have exit fees –Investment options: Are you happy with current choices? Will you keep an eye on all your pensions? –Annual charges: How do they compare? You may need to get advice but call BlackRock for help or information FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION 23

Auto-Enrolment

25 Auto-Enrolment UK Government has introduced new legislation to help people save for their retirement Employers now required to automatically enrol employees into a workplace pension University of Reading to use URPS as its workplace pension for staff in grades 1-5 or equivalent

Auto-Enrolment University will be writing to everyone in July but won’t start assessing for auto-enrolment until October Anyone who earns more than £787 per month and is 22 – State Pension Age will be enrolled Can opt out, but not until you have been enrolled Enrolment information will explain how to opt out and the timescales which apply Existing scheme members are not affected apart from a requirement to send them some information FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION 26

Member Nominated Trustee

Member Nominated Trustee (MNT) University will be writing to members shortly to ask if anyone is interested in becoming an MNT Currently 2 Trustees: an independent Chair and an employer nominated Trustee Need a member Trustee to join Trustee Board, to act on behalf of members Not a negotiating forum FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION 28

29 BlackRock Helpline Number BlackRock Website Future Help BlackRock

30 FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION

31 Summary Employer contributes to your pension scheme Lifestyle or Self Select investment options Access to your account online 24/7

32 BlackRock Helpline Number BlackRock Website Future Help BlackRock

1.Issued by BlackRock Life Limited, authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: Registered in England and Wales No For your protection telephone calls are usually recorded. BlackRock is a trading name of BlackRock Life Limited. 2.Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time. 3.Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. 4.This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer. 5.Subject to the express requirements of any client-specific investment management agreement or provisions relating to the management of a fund, we will not provide notice of any changes to our personnel, structure, policies, process, objectives or, without limitation, any other matter contained in this document. 6.Unless otherwise specified, all information contained in this document is current as at 1 June FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR PUBLIC DISTRIBUTION 33

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