Time to Retire Traditional Thinking on Retirement Stan Russell Senior Business Development Manager

The Retirement Income Market ABI Code Of Conduct Non-Advised Sales Conventional Annuity Rates Conventional Annuity Rates Changing Retirement Patterns Changing Retirement Patterns Additional Planning Additional Planning Alternative Solutions Annuity Market

People living longer “Underlive” your life expectancy People living longer “Underlive” your life expectancy Income provider default Reduction in “fund” values reduces future benefits Future income impacted by investment returns Future income impacted by changes in annuity rates Rising prices erodes income in real terms Credit Risk Capital Risk Investment Risk Annuity Rate Risk Inflation Risk Mortality Risk Six-Box ‘Reason To Talk’

Credit RiskAnnuity Rate Risk Mortality Risk Capital Risk Investment Risk Inflation Risk Conventional (non escalating)   Fully Linked - RPI   Investment   Investment Linked (AGR)   Variable (120%/50%) Drawdown (Including Fixed Term Annuity)

An annuity client is really just looking for on e simple thing from their financial adviser Product Example – Annuity Get me the highest income!

Non Advice Or Advice DIY Where do I find info? How much does advice cost? OMO / wake up pack

The Fears Of Getting It Wrong… Source: This is Money 1 June 2013

Conventional Annuities When Do You Get Your Money Back? Male Aged 65… Male Typical Pension Purchased with £100,000 Fund * Life Expectancy ** Payback Period (Years) £12,120 £7,340£5, Source: *Prudential calculations based on a 65 year old, single life male with a £100,000 fund value, using typical level annuity rates in April 1993,2003 and Source William Burrows Annuity

C Age Minimum Income Choice Annuity (0% RSR) Maximum Income Choice Annuity (5% RSR) Best in market level conventional 55£1,318£2,986£2,435 (3.50%) 60£1,526£3,166£2,690 (3.65%) 65£1,834£3,464£3,028 (3.75%) 70£2,245£3,871£3,456 (3.79%) Figures are based on a single life with a £50,000 pension pot and paid monthly in advance as at July Comparing Starting Incomes…

“Paying For “Optional” Extras – Case study 1 1 £3,058 (best in market conventional) Single Life Dependants Joint Life 100% Reduces £434 £2,624 (best in market conventional) or Reduces £ % RSR £2,943 (Income Choice Annuity) Figures are based on a 65 year old, spouse 3 yrs younger, with a £50,000 pension pot and paid monthly in advance as at 09/09/2013. £3,058 (best in market conventional)

“ Paying” for “optional” extras – case study 2 £3,058 (best in market conventional) Single Life Level Rising income Single Life RPI Reduces £1,270 £1,788 (best in market conventional) or Figures are based on a 65 year old with a £50,000 pension pot and paid monthly in advance as at 09/09/ %2%3%RSR0%1%5% £2,976£2,310£2,636 Starting Income £1,712£2,001£3,328 £82£748£422 Income Reduction (against single life level) £1,346£1,057N/A “Paying For “Optional” Extras – Case Study 2 1

The Value Of Drawdown Advice Phased Solutions Phased Solutions Income Recycling Assessing All the risks Assessing All the risks Reviews Other Income Sources Other Income Sources Outcome Variability Your Process

£ 100,000 Fund, £ 6,000 Income 5 years Fund Average Return ReturnsEnd Value 6% A B C £100,800 £88,500 £100,000

Review Calculator Choose your income level Select minimum and maximum GAD rate at first review Choose which PruFund is appropriate Future income stream potential as % of fund and change in max income Fund based on EGR less all charges Use EGR or build in a ‘safety margin’

PruFund Three Year Past Performance…

Final Thoughts… The Retirement market is getting bigger The alternatives need to be considered The alternatives need to be considered There are risks to client outcomes and your business There are risks to client outcomes and your business It is time to change traditional thinking on retirement

This presentation contains some forward thinking statements which should not be taken as fact. Information given is based on our current understanding, as at January 2013, of current taxation, legislation and HMRC practice, all of which are liable to change. No reproduction, copy, transmission or amendment of this presentation maybe made without the written permission from Prudential. “Prudential" is a trading name of The Prudential Assurance Company Limited, of Prudential Annuities Limited and of Prudential Retirement Income Limited. This name is also used by other companies within the Prudential Group, which between them provide a range of financial products including life assurance, pensions, savings and investment products. The Prudential Assurance Company Limited and Prudential Annuities Limited are registered in England and Wales. Registered Office at Laurence Pountney Hill, London, EC4R 0HH. Registered numbers and respectively. Prudential Retirement Income Limited is registered in Scotland. Registered Office at Craigforth, Stirling FK9 4UE. Registered number SCO Thank you – questions and the small print