Looking ahead with PensionBuilderplus

2 To explain:  What happens now to your Final Pay Section pension  How PensionBuilderplus works  Decisions you may wish to make  Your investment options  Your options at retirement  Questions Today’s presentation

Changes to Lafarge’s original proposals You should have received:  A letter from the Company, sent 19 September 2011  A personalised magazine in a PensionsFile with investment information, sent 23 September

Your Final Pay Section pension You will receive a letter from the Pensions Department by Christmas  The amount of your deferred pension  How the Deferred Pension will increase over time  Any benefits available to you on death  Your options available (e.g. transfer, early, normal retirement) 4

PensionBuilderplus On 1 November 2011, you will automatically be :  enrolled into PensionBuilderplus  employee contributions: 6% or 5% - your highest rate  employer contributions: 12% or 10%  contribute through PenXchange  invested in the default Lifestyle option In January 2012  £1,200 will be paid into your Personal Investment Account 5

PensionBuilderplus If you want to do something different: You can reduce your contribution rate (this will also reduce the Company rate) You can change your investment options You can opt out of PenXchange You can opt out of PensionBuilderplus altogether (but there may be consequences) You can choose to take £1,000 cash (subject to tax and National Insurance, paid in your January pay) instead of the £1,200 contribution into your personal investment account But before you do let’s explain some more… 6

How PensionBuilderplus works 7

 ‘Hands on’ approach  7 fund choices  ‘Hands off’ approach  Ready-made investment option  The default is the Lifestyle option with expected retirement age of 65 Option 1: Lifestyle Your two investment options Whatever you decide, you can change your mind in the future. It’s important to regularly review and, when necessary, switch your investments 8 Option 2: Self-select

Your investment options – Lifestyle option  Suitable for those who don’t want to self select  Automatically switches you into less risky funds as you approach retirement  7 years before selected target retirement age  Invested in Global Equities Fund  Auto switching to Pre-Retirement Fund starts  All new contributions to Pre-Retirement Fund  3 years before selected target retirement age  Letter received - Do you want a cash sum?  Auto switching and new contributions into the Cash Fund to aim for 25% cash if requested 9 Choose your target retirement age – currently age 65

Your investment options - Lifestyle switching chart 10

Your investment options – Self Select option Under PensionBuilderplus you have the choice of investing in the following ways:  You decide where to invest your personal investment account  You can tailor your investment choices to suit your personal circumstances  Review your investments regularly (particularly as you approach retirement)  Cash Fund  Index-Linked Government Bonds Fund  Pre-Retirement Fund 11  Corporate Bonds Fund  Government Bonds Fund  Overseas Equities Fund  UK Equities Fund

Your investment options – asset classes  Don’t forget your PensionsInvestments booklet Asset classes  Equities – shares in companies  Bonds – typically loans to the Government or companies which gain interest  Cash – cash type investments Returns on Government Bonds can be fixed or linked to inflation (index-linked) 12

Your investment options – attitude to risk You need to consider your attitude to risk  Capital risk – the possibility that an investment will lead to a gain or a loss. The higher the capital risk, the higher the anticipated rewards or potential losses; the lower the capital risk, the lower the anticipated rewards or potential losses  Inflation risk – the possibility that an investment will not grow quickly enough to keep up with increases in the cost of living. The lower the anticipated rewards, the greater the inflation risk  Concentration risk – the risk of having ‘all your eggs in one basket’ 13

Your investment options – asset classes 14 Source: Morningstar and CAPS survey £100 £2,648 £1,634 £330 £311

Your investment options - the importance of your age The relative importance of the different types of risk changes as you approach retirement  It’s important that you regularly review your investment choices When you are a long way from retirement  Good long-term investment growth is important when you’re young  You have time to take the rough with the smooth, investment-wise  Consider investing in equities As you approach retirement – Pension conversion risk  Need to protect your account from sharp falls in the stock markets  Consider investing in bonds, which broadly track the cost of buying an annuity  Think about cash funds if you are going to be taking a lump sum when you retire 15

Your investment options - reminders You are automatically in Lifestyle, however…….  Lifestyle option may not be right for everyone  Don’t forget to confirm your selected retirement age if different to the default of age 65  If you want to switch from Lifestyle to Self Select: Complete and return a Contributions & Investment Election Form 16

Your investment options - further information  PensionsInvestments booklet in your PensionsFile  Track progress on your annual pension statement  Visit and go to ‘L&G investment options’ to access the LGIM website for L&G fund performancewww.lafargeukpensions.com  Don’t forget your Final Pay Section pension – see PensionFacts for more information  Visit fund-choices.pdf 17

Your retirement considerations  When do you want to retire?  How much money do you need to live on in retirement?  Mortgage? Car? Holiday? Grandchildren? Travel?  What sources of pension do you have?  PensionBuilderPlus  Basic State pension  State Second pension  Deferred pension from Final Pay Section  Pensions from other employers  Other savings (e.g. ISAs)  How much money do you need to contribute and for how long?  How much money can you afford to contribute? 18

Your personal illustration 19

Your options at retirement There are several options for your PensionBuilderplus personal investment account when you retire Option 1:  Use your personal investment account to buy an annuity on the open market Remember:  Make sure you think about where your account is invested as you approach retirement to minimise pension conversion risk. You may wish to match annuity rates by investing in the Pre- Retirement Fund  Consider your other savings to ensure you have enough to live on in retirement  Think about what type of annuity best suits your needs 20

Your options at retirement Option 2:  Take some of your personal investment account as tax free cash, and use the rest to buy an annuity Remember:  Consider which investment option best suits your needs  If you’re planning to take tax free cash, you might find that the Lifestyle option gives your personal investment account the most protection against capital risk 21

Your options at retirement Option 3:  Take all or part of your personal investment account as tax free cash, thereby reducing the amount of Final Pay pension commuted (or given up) for cash Remember:  As you approach retirement you may wish to be invested in the Cash Fund 22

23 Death and ill health benefits As a member of PensionBuilderplus you are covered for:  Lump Sum Death Benefit of 4 x Pay, plus spouse’s or dependant’s pension  In addition your Deferred Pension from the Final Pay Section will provide you with further cover that will be explained in your Deferred Pension letter  As a member of PensionBuilderplus, you are covered under the Group Income Protection Policy subject to the insurer’s terms If you were a non-member (Associate) you would ONLY be covered for:  Lump Sum Death Benefit of 1 x Pay

Help and support  Pension employee helpline –  Employee Assistance Programme (EAP) –  Independent Financial Advisers’ 24

Questions

Deferred Pension and PensionBuilderplus tax free cash sum  Final Pay Deferred Pension £18,156 p.a.  Projected PensionBuilderplus account£104,000  Tax Free Cash From Final Pay 18,156 x 4.54 = £82,428  Tax Free Cash From PB+ 104,000 x 25% = £26,000  Total Tax Free Cash = £108,428 Final Pay Benefits  Tax Free Cash Sum (£108,428 - £104,00) = £4,428  Reduced Plan Pension £18,156 – (£4,428 ÷ 14.30) = £17,846 p.a. PensionBuilderplus Benefits  Tax Free Cash Sum = £104,000

January 2012 payment Andrew aged 45 – Basic Rate Tax Payer, Salary £28,000 Option 1: £1,200 is credited to his PensionBuilderplus account. Take home pay in January 2012 will remain the same. This sum is not accessible until Andrew draws his retirement benefits – the earliest permissible retirement age is 55. At age 65, this contribution could be worth approximately £3,500 which may be taken as tax free cash or used to buy a taxable pension.  Option 2: £1,000 is added to his January pay but after tax and National Insurance the actual increase to his take home pay is £680.