2015 Pension plan Lunch & Learn 2 December 2014

What you should remember - Valuable pension for valuable employees - Less pension accrual - Get in control

Valuable pension for valuable employees

RBS NL Pension Fund Funding ratio 138% 122% on market rates 1,42% indexation 2013 Realistic indexation ambition 4 Dutch pension sector 107% end of October <100% on market rates Often no indexation granted In 2013 cuts with 68 funds averaging 1.9% and impacting 3.1mln participants

Our valuable plan recognised IPE Awards Vienna 20 November 2014 Nominated “Best Pension Fund of The Netherlands” Financieel Dagblad 27 November 2014 FD featured an article on RBS NL Pension Fund commenting on its sound policies and continuation of a classic defined benefit scheme

Trouble in paradise

Trouble in paradise? Pension funds Allocation of shortfall 3 children and 2 candies Funding ratio <100% 10 rolling average #children 1,65 Assumptions on future availability of candy Dutch Government Budgetary deficits Budget deficit Excess savings/insufficient consumption

Quick fixes pension funds? Revision of Financial Assessment Framework (FTK) Aim to secure nominal pensions Higher reserves Lower indexation probability Balance interests of generations Indexation ambition Nominal guarantee

Quick fixes government Reduction of tax facilities for pension accrual Increase of pensionable age to 67 (month following 67 th birthday) From 86% average career pay to 75% Pensionable salary capped at EUR 100k Compensation in disposable income Jumpstart Dutch economy? Net pension arrangement > 100K

What does this mean for you?

Pensionable salary 2,15 salary accrual % Current situation Every year you accrue 2,15% pension over your pensionable salary In 42 years you accrue ±88% of your career average pay

What does this mean for you? Pensionable salary 2,15 Pensionable salary salary accrual % Current situation New situation 2,15accrual %

What does this mean for you? Pensionable salary € 100k 2,15 salary accrual % Current situation New situation 2,15accrual %

How do we compensate? Benefits budget neutral Reduction accrual to 1.875% from 2.15% from unlimited to max. € € 100k 1.875% 0.0% €15.6 € 2.6 mln Cost-effective contribution x €1 mln.(% of pension base) € 1.9 mln I II III

How do we compensate? Benefits budget neutral Compensation for reduction in accrual %

How do we compensate? Benefits budget neutral Compensation for reduction in accrual % Additional pensionable salary component Elements pensionable salary Base salary 13th month 4.2 surcharge Holiday allowance AMT Stand-by allowance + 1% contribution sponsor to employee benefit budget Elements pensionable salary Base salary 13th month 4.2 surcharge Holiday allowance AMT Stand-by allowance + 1% contribution sponsor to employee benefit budget

How do we compensate? Benefits budget neutral Compensation for reduction in accrual % Additional pensionable salary component Increase in base salary 2,75% increase in base salary

How do we compensate? Benefits budget neutral Compensation for reduction in accrual % Additional pensionable salary component Increase in base salary Lower offset for state pension (AOW) AOW offset reduced from EUR 13,449 to EUR 12,642 resulting in higher pension accrual AOW offset reduced from EUR 13,449 to EUR 12,642 resulting in higher pension accrual

How do we compensate? Benefits budget neutral Compensation for reduction in accrual % Additional pensionable salary component Increase in base salary For incomes exceeding EUR 100k Flat % net pension allowance Net pension arrangement Old age pension Survivor benefits

Net pension arrangement 100K+ Full time salaries exceeding 100k receive compensation Flat % compensation over excess (±40% in 2014) Paid monthly Employer will arrange for 3rd party net pension scheme Qualifies for pension accrual under Dutch Pension Act Non-taxable upon receipt of pension Non-taxable in box 3 (wealth tax) Individual defined contribution Investing in life cycle funds Capital serves to purchase an annuity at pensionable age Survivor pension covered on basis of opting-out Old age pension on basis of opting in

Example: EUR 60k 2014 costs Accrual 1,875% and 1% BB AOW offset 2,75% Salary increase 2,75% Salary increase 2015 costs Increase pension- able age

Example: EUR 110k 2014 costs Accrual 1,875% and 1% BB AOW offset AOW offset 2,75% Salary increase 2,75% Salary increase 2015 costs Increase pension- able age Salary cap EUR 100k Salary cap EUR 100k Pension Allowance Pension Allowance

Balanced outcome To the extent possible compensated individually Lower incomes benefit more from lower AOW offset and accrue only slightly less in 2015 Incomes <100k partly compensated by higher accrual in RBS NL Pension fund and partly in salary Income >100k receive flat % over income in excess of salary cap (annually adjusted)

Get in control!

Pension plan with RBS NL Fund remains financially sound Reduced accrual in RBS NL Fund Save or consume increase in salary Possibility of accrual in Net Pension Arrangement for full time incomes exceeding EUR 100k Responsibility for retirement income shifts to you Pension accrual/saving/investing or consuming Insurance coverage >100k via opting-out Mortality risk Morbidity risk

What’s next Choices > EUR 100k net pension arrangement to be made in December Risk cover via opting-out Net pension accrual via opting in Via HR Payroll Presentation available on website Action page available on website Separate sessions with EUR 100k plus earners Use On Track planning module Launch get in control campaign 1Q2015

What’s next In 3Q14 a wide public debate has been started on the future of the retirement industry. We are faced with following challenges: Low yield environment Retrenching government Changing labour market dynamics Demographics Exploding healthcare costs Suitable housing for the elderly Intergenerational fairness Changes to the pension scheme expected as a result of this debate but timing yet unknown

Remember - Valuable pension for valuable employees - Reduced accrual in fund - Get in control of your future retirement income - opt-in net pension - opt-out risk cover