Page 1Siemens plcPage 1 July./ August 2007 SIEMENS UK PENSION PLANS Member Briefings July/ August 2007

Page 2Siemens plcPage 2 July./ August 2007 Agenda 1.Today’s purpose 2.The need for change and the aims of the review 3.Outcome of the review 4.The consultation process 5.Where to get more information 6.Your questions

Page 3Siemens plcPage 3 July./ August 2007 The UK pensions crisis

Page 4Siemens plcPage 4 July./ August 2007 Future service costs

Page 5Siemens plcPage 5 July./ August 2007 Liabilities and assets Deficit = £539m

Page 6Siemens plcPage 6 July./ August 2007 Financial Position of UK DB Plans - Actual IAS Accounting Figures September 2006 Pensions Scheme £(000)AssetsLiabilitiesDeficit Funding Ratio % Siemens Benefits Scheme1,751,4002,192,500441,10080% Siemens Building Technologies Limited Retirement Benefits Scheme (Landis & Staefa) 29,05939,41010,35174% Siemens Fire Safety and Security (PFP) Pension Scheme (Preussag) 9,24312,3903,14775% Siemens Magnet Technology Pension Scheme36,69258,16821,47663% Electrium Pension Scheme71,40078,7007,30091% VA Tech (UK) Pension Scheme113,022146,12933,10777% VAI Industries (UK) Limited Pension Scheme45,45068,07122,62167% TOTAL2,056,2662,595,368539,10279%

Page 7Siemens plcPage 7 July./ August 2007 Additional contributions and deficit repair

Page 8Siemens plcPage 8 July./ August 2007 Action taken to date Defined benefit schemes closed to new entrants Increased employee contributions/reduced future accrual rates Reduced cap on increases to pensions in payment Termination of future pension accruals for some acquired companies This has not been enough

Page 9Siemens plcPage 9 July./ August 2007 The aims of the review Increase the security of the benefits that members have earned to date, by Siemens making cash payments to reduce the pension schemes’ deficits Help to secure employment by making the company more competitive through the reduction of future pension costs Continue to provide significant ongoing financial help to employees to build up their pension savings

Page 10Siemens plcPage 10 July./ August 2007 Pension review: members affected

Page 11Siemens plcPage 11 July./ August 2007 Outcome of the review: the Company’s proposals Siemens will pay off all relevant pension schemes’ deficits before the end of The deficits will be calculated using the method that applies to the figures shown in company accounts. In addition, the company will put forward a plan to pay off future deficits as they arise No change will be made to the accrued pension entitlement that relates to members’ pensionable earnings before 31 December This pension will continue to benefit from an element of linkage to your future earnings. From 1 January 2008, members will not build additional final salary pension but will be offered a “defined contribution” pension for the future, instead From 1 January 2008, instead of membership of a defined benefit scheme, members will be able to join the Investor Plan section of the Siemens Benefits Scheme, on specially improved terms

Page 12Siemens plcPage 12 July./ August 2007 Reminder of how pension benefits build up now Final Salary example - member of Siemens Benefit Scheme:  30 years pensionable service  Retires at 65  Final pensionable salary of £30,000.  1/60 pension build up Pension calculation 30/60 x £30,000 = £15,000 per annum

Page 13Siemens plcPage 13 July./ August 2007 Reminder of how pension benefits build up now Defined Benefit: Employee pays contribution Sponsoring employer meets balance of the cost

Page 14Siemens plcPage 14 July./ August 2007 How pension builds up under defined contribution

Page 15Siemens plcPage 15 July./ August 2007 Defined Benefit and Defined Contribution - Normal Retirement Age  Tax free cash decision (Maximum 25% of the value of the fund)  Pension secured by annuity  Basis can be decided at retirement to suit circumstances at the time.  Tax free cash decision (Maximum 25% of value of benefits)  Pension basis cannot be changed i.e five year guarantee, spouse’s pension and increase basis. Defined ContributionDefined Benefit

Page 16Siemens plcPage 16 July./ August 2007 Defined Benefit and Defined Contribution – Early Retirement  Fewer contributions paid  Shorter investment term  Lower annuity rate  Pension reduced  Fewer years of service  Lower pensionable salary?  Early retirement factors applied Defined ContributionDefined Benefit

Page 17Siemens plcPage 17 July./ August 2007 Enhanced Matching The Company will match employee contributions up to 10% on a 2 for 1 basis in year 1 Enhanced matching will reduce to 1.5 for 1 by year 11 in increments of 0.05% Enhanced matching will continue at 1.5 for 1 for a further 5 years Enhanced matching payments will be made on a monthly basis together with normal matching Contributions are made through My choice flexible benefits system

Page 18Siemens plcPage 18 July./ August 2007 Enhanced Matching

Page 19Siemens plcPage 19 July./ August 2007 Matching (assuming maximum employee contribution) YearCalendar Year Employee contribution (%) Employer match (%) Total combined maximum contribution (%)

Page 20Siemens plcPage 20 July./ August 2007 Matching (assuming minimum employee contribution) YearCalendar Year Employee contribution (%) Employer match (%) Total combined minimum contribution (%)

Page 21Siemens plcPage 21 July./ August 2007 The State Pension State Second Pension (S2P):  Earnings Related tier of the State Pension  Broadly based on earnings that are subject to National Insurance  Contracting out:  Siemens Benefit Scheme contracted out  Investor Plan contracted in

Page 22Siemens plcPage 22 July./ August 2007 The State Pension HMRC Basic State pensionNational Insurance Employee 9.4% Employer 9.3%

Page 23Siemens plcPage 23 July./ August 2007 The State Pension HMRC Basic State PensionNational Insurance Employee 11.00% Employer 12.80% Personal Pension Arrangement State Second Pension NI Rebate

Page 24Siemens plcPage 24 July./ August 2007 Example of affect on take home pay – salary £29,700 As a result of My choice your salary is already reduced to take account of your contributions paid through salary conversion This is broadly 9.4% of your earnings between £433 and £2,903 a month + 1% on earnings above this As your contributions are based on a higher pensionable salary, this figure is now less (due to the salary conversion process) This has increased as it is now 11% of your earnings between £433 and £2,903 a month and 1% on earnings above this Overall your take home pay is now less Your tax bill reduces because your taxable salary has gone down BEFORE AFTER

Page 25Siemens plcPage 25 July./ August 2007 Enhanced Revaluation Basis Pensions earned to date are not “frozen”: a substantial element of salary linkage is proposed Salary* linkage of benefits earned to 31 December 2007, subject to a maximum of Retail Prices Index + 2% in any year for 15 years Benefits will never be less than those of a member who left on 31 December 2007 and received the revaluation required by law * Based on “Final Pensionable Salary” in the Defined Benefit scheme

Page 26Siemens plcPage 26 July./ August 2007 Overview of pension revaluation

Page 27Siemens plcPage 27 July./ August 2007 Overview of pension revaluation

Page 28Siemens plcPage 28 July./ August 2007 Year to year capped salary linkage Pension at 31/12/07: 10 x £24,000 x 1/60ths= £4,000

Page 29Siemens plcPage 29 July./ August 2007 Year to year capped salary linkage Increases for employee Final Pensionable Salary Retail Prices Index Retail Prices Index + 2% Pension Start of year 1£24,000N/A £4,000 % changes by end year 15%4%6%£4,200 Pension at 31/12/07: 10 x £24,000 x 1/60ths= £4,000

Page 30Siemens plcPage 30 July./ August 2007 Year to year capped salary linkage Increases for employee Final Pensionable Salary Retail Prices Index Retail Prices Index + 2% Pension Start of year 1£24,000N/A £4,000 % changes by end year 15%4%6%£4,200 % changes by end year 24%1%3%£4,326 Pension at 31/12/07: 10 x £24,000 x 1/60ths= £4,000

Page 31Siemens plcPage 31 July./ August 2007 Year to year capped salary linkage Increases for employee Final Pensionable Salary Retail Prices Index Retail Prices Index + 2% Pension Start of year 1£24,000N/A £4,000 % changes by end year 15%4%6%£4,200 % changes by end year 24%1%3%£4,326 % changes by end year 34%2%4%£4,500 Pension at 31/12/07: 10 x £24,000 x 1/60ths= £4,000

Page 32Siemens plcPage 32 July./ August 2007 Minimum level of increase

Page 33Siemens plcPage 33 July./ August 2007 Death Benefits from 01/01/2008 Investor Plan Greater of: 3 x death benefit salary plus value of member account and 6 x death benefit salary Plus Deferred Pension Dependant’s pension from pension built up until 31/12/2007 (if applicable) For details of what applies in your scheme you can contact the Helpdesk: Internal tel: x (option 6) External tel:

Page 34Siemens plcPage 34 July./ August 2007 Deficit Payments The 2007 “balance sheet” deficit will be paid off by 31 December 2007 Any “balance sheet” deficits arising in future years will generally be paid off by the Company before the next year’s valuation (subject, in some cases to a cap to cover extreme market developments)

Page 35Siemens plcPage 35 July./ August 2007 Deficit Payments The Company’s cash payments are expected to be several hundred £million The actual amounts will depend on the “balance sheet” deficits calculated at 30 September 2007 These payments give added security to the pension earned by members to 31 December 2007

Page 36Siemens plcPage 36 July./ August 2007 Illustrative ‘before and after’ comparisons

Page 37Siemens plcPage 37 July./ August 2007 Siemens Benefits Scheme Illustrative “before and after” comparisons; A member who keeps their take home pay the same.

Page 38Siemens plcPage 38 July./ August 2007 Siemens Benefits Scheme Illustrative “before and after” comparisons; A member who keeps their take home pay the same.

Page 39Siemens plcPage 39 July./ August 2007 Siemens Benefits Scheme Illustrative “before and after” comparisons; A member aiming to get the maximum company contribution

Page 40Siemens plcPage 40 July./ August 2007 Siemens Benefits Scheme Illustrative “before and after” comparisons; A member aiming to get the maximum company contribution

Page 41Siemens plcPage 41 July./ August 2007 Consultation process The company wishes to consult for longer than the legal requirement of 60 days Consultation involves an exchange of views and the establishment of a dialogue Consultation means working in a spirit of co-operation and taking into account the interests of both groups Ultimately, the company will have to make a decision based on the input and information it receives during the consultation

Page 42Siemens plcPage 42 July./ August 2007 Where do you get more information?  Speak to one of your local employee consultative forum representatives  Read Defined Benefit Pensions Review Proposals updates  Pension Review Helpdesk [internal tel (option 6); external tel: ;  Log on to the intranet at:  How do you make your views known? Complete feedback form enclosed with update