©UFS Bankhall Advisor Forums Retirement Planning: Risks and Rewards MetLife Europe Limited

2 A growing business Source: Watson Wyatt By 2013, almost one million new at retirement products each year compared with 460,000 in 2007

3 Why you should invest your time Retirement income advice set to explode Move from state support to individual reliance Baby boomers DB to DC Personal pensions 1988 UK solutions are complex and most require advice

4 Guarantees are a growing opportunity Source: Standard Life Investment Briefing May 2007 PP Ann SIPPDD Funds Age PP Ann SIPP DD VA Funds Age

5 Retirement Risks Risks facing retirees –Longevity –Inflation –Investment »Performance »Timing –Interest rates –Health Amongst a number of others…

6 Life Expectancy at age 65 United Kingdom Government Actuaries Department, central cohort projection for 2003 and 2006

7 The effects of inflation Retail Price Index (RPI) Jan 1987 to Jan 2008

8 Running Out of Money 6% investment growth per annum, £100,000 investment, income deducted annually in advance

9 FTSE All Share Index Total Return Source: Lipper 15 th February 2008 The value of investments can fall as well as rise. Past performance is not a guide to future performance. You may get back less than you invested.

10 FTSE 100 Quarterly Trading Ranges Source: Lipper Hindsight

11 Two ways of taking income Invest immediate income in cash and leave balance invested Invest all funds and take income each month What are the consequences of each?

12 Invest all funds How much income really costs Rising market Falling market £25,380 £36,274 Discounted cost over 5 years of £500 p.m. income at +7% p.a. and -7% p.a. Gross cost of income £30,000

13 Set cash aside Drawdown Pension Fund Critical Yield 8% per annum Equities 75% Cash 25% Critical Yield goes up

14 Set cash aside Critical yield 8% Male 65 max GAD 8.4% £200,000 investment gives income of £16,800 p.a. 3 years income allocated to cash receiving 5% p.a.£46,790 Required yield from remaining fund8.9% 3 years income allocated to cash receiving 3% p.a.£48,171 Required yield from remaining fund9.6% 3 years income allocated to cash receiving 4% p.a.£47470 Required yield from remaining fund9.2%

15 Investment Timing £500,000 invested with £25,000 income taken annually and constant 6% per annum growth The figures above show the return for the income taken at the growth rate shown. They do not represent any particular investment or portfolio of investments. These figures are for illustrative purposes only and cannot be guaranteed. They are not a recommendation or advice as to how markets will perform.

16 Sequence of Returns Annualised returns from two portfolios Average annual return in both cases is 10.39%

17 Sequence of Returns Annualised returns from two portfolios The two portfolios, £100,000 invested with £5,000 income increasing at 3.5% per annum taken annually in advance

18 You Tailor Their Pension, Not Us Base Product Product Investment Guarantees Options Index Funds Index Portfolios Goldman Sachs Managed portfolios SIPP Capital Guarantee Deferred Income Guarantee Immediate Income Guarantee Fund Switching Auto Rebalancing Customer Agreed Remuneration Trail Commission Initial Commission Fee Direction of decision

19 Applicable at every stage of retirement planning AccumulationConsolidation Pre Retirement Deferred Income Guarantee Death Capital Guarantee Income Guarantee

20 Capital Guarantee Lock-ins every three years to ensure value at end of term Secure Review Fund Value Annual Growth

21 Secure Income Option (deferred) The Secure Income Option allows you to guarantee your income but defer the time when you start For each year of deferment you will increase the Secure Income Base by 3% of the initial contribution Every three years the Secure Income Base can increase further with the Secure Income Review This means that clients can have certainty about what income they will receive in the future

22 Secure income Option (deferred) £100,000 initial contribution – single life income selected Age at inception Guaranteed income if it commences at: £6,240£7,685£9,280£10,850 55£5,520£6,890£8,410£9, £6,095£7,540£8, £6,670£8, £7,130 The guaranteed income for life may be much greater as every three years a Secure Income Review takes place which resets the Secure Income Base to the then fund value if greater

23 Deferred Income Guarantee 3% increases guaranteed plus lock-ins where market falls at the end Secure Income ReviewFund ValueAnnual Growth Secure Income Base

24 Secure Income Option Lock-ins every three years to increase Secure Income Base Secure Income Review Fund Value Annual Growth

25 Overcoming GAD Limits GAD limits the amount of income which can be taken from a drawdown fund Limits are: –0% - 120% of Basis Amount before age 75 –55% - 90% of Basis Amount for age 75 or over Could potentially cause income to be reduced when under guarantee

26 Fund level for GAD calculation Difference between fund value and GAD value made up by ‘notional units’ Overcoming GAD Limits

27 Summary Clients face many risks in retirement Individual advice is essential

28 MetLife Corporate Video - Rosy This presentation has been provided to recipients for information only and has not been approved as a financial promotion. Notwithstanding the foregoing, this presentation is only being provided to professional financial advisers. This presentation does not constitute an offer or inducement to purchase or subscribe for securities in a product or fund. The information in this presentation may not be complete and may be changed, modified or amended at any time and is not intended to, and does not, constitute any representations and warranties of MetLife Europe Limited. The information contained in this presentation is intended to provide general information only and does not take into account individual objectives, financial situation or needs. All reasonable care has been taken in relation to the preparation and collation of this presentation. Except for statutory liability which may not be excluded, no member of MetLife accepts responsibility for any loss or damage resulting from the use of or reliance on this presentation by any person. The information is taken from sources which are believed to be accurate but no member of MetLife accepts any liability of any kind to any person who relies on the information contained in it. The copyright of this presentation and any documents supplied with it and the information contained therein is vested in MetLife. They should not be copied, reproduced or redistributed without prior consent. Issued by MetLife Europe Limited, authorised by the Irish Financial Services Regulatory Authority and regulated by the Financial Services Authority for the conduct of its UK insurance business. Registered office: First Floor, Fitzwilton House, Wilton Place, Dublin 2. Registration number: UK branch address: One Canada Square, London E14 5AA. UK branch registered number: BR Important information

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