New Ideas About the Distribution Phase Integrating Retirement Income & DC Plan Design Institutional Investor Institute Corporate Funds Roundtable March 5-6, 2012 Mandarin Oriental, Washington, D.C.

Build Secure Income Potential Income LIFETIME INCOME ILLUSTRATION Hypothetical example 1. Account balance invested in traditional target date portfolio starts building Income Benefit 2. Participant activates Income Benefit and commences withdrawals, remains invested in markets 3. Participant entitled to withdraw full value of Income Benefit each year regardless of performance 4.If account balance is depleted, insurer pays Income Benefit for life Note: Account balance remaining at time of death is paid to beneficiary and may be withdrawn by participant at any other time with no additional fees. However, early and excess withdrawals may represent the forfeiture of significant economic value. Other sources of assets should generally be considered first. Point of Activation Accumulation Withdrawal Insurer Payout Secure Income Age V-1 S:\paic\March 2012

RETIREMENT INCOME ALTERNATIVES 1 GLWB – Guaranteed Lifetime Withdrawal Benefit 2

INVESTMENT & ALLOCATION Allocation % Secure Income Portfolio - 60% equity/40% bonds, higher fee e.g. 120bps, secure income Equity & Bond Portfolios - Custom allocation, low fee e.g. 14bps, no secure income Complete solution over lifecycle As a young saver, invest in low cost global equity & bond portfolios As a pre-retiree, build secure income & remain invested in markets As a retiree, withdraw lifetime income with confidence Phase-In Period Age V-3 S:\paic\March 2012

 Lifetime Income Strategy Fund displayed as single option for investment elections and transfers  Quarterly statements include single Lifetime Income Strategy Fund market value & income  Web requests and accounting activity list single Lifetime Income Strategy Fund  Some performance pages will display data for sub- funds  Unique personal rates of return are calculated for participants at plan account-level  Lifetime Income Strategy program implemented through a single shell fund and multiple sub-funds on recordkeeping platform  Investment Manager provides investment direction to record keeper for each participant – specific to date of birth and activity.  Record keeper and Investment Manager exchange balances and activity nightly  Aggregator supports daily record keeping functions for Lifetime Income Strategy  Coordinates competitive bidding and allocation process for quarterly withdrawal rates  Calculates Income Base and guaranteed withdrawal amount per participant  Coordinates insurer payments through Trustee if market value is depleted  Track benefits and elections  Maintain allocated group annuity contracts and insurance company separate accounts  Pay benefits if market value of account is depleted Participant LIS Fund Equity Fund Secured Fund Investment Manager Lifetime Income Strategy (LIS) Aggregator Platform Insurer 1 Insurer 2 Insurer 3 Bond Fund PERSONALIZED SAVINGS, INVESTMENT & INCOME PROGRAM Infrastructure delivers custom built, individual income benefit Participant-specific by date of birth & individual activity 4 PROGRAM IMPLEMENTATION

Approved Insurers Allocation Formula Quarterly Blended Withdrawal Rate 25% Quarterly Poll 5.2%5.0% 25% 50% Insurer 1 Insurer 2 Insurer 3 Insurance Aggregator 5.1% Diversification, competition & capacity Record Keeper Multi-insurer aggregator platform Withdrawal rate process Aggregator polls insurers quarterly Allocate via rate & diversification formula Fixed fee cannot increase Purchased benefit cannot decrease Aggregator interfaces with record keeper & insurers A flexible & extendable operational structure 5 DELIVERING SECURE INCOME

Low utilization rate Benefit becomes outmoded / Insurers discontinue benefit Insurer insolvency Aggregator termination / replacement Early adopter Regulatory 6 Growth, liquidity and control Flexibility in design Multi-insurer, insurance safety net Transferable platform Design control Broad support and interest LIFETIME INCOME DESIGN Obstacles / risks and solutions