1. Pension Freedoms Presentation JUDI MILLER OCTOBER 2015

2. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Agenda An Introduction to Arthur J. Gallagher (Employee Benefits) What is a Group Pension The changing face of State Pensions A look at the pension flexibilities introduced from April 2015 Uncrystallised Funds Pension Lump Sum Flexi-access Drawdown When and how you can access your benefits Taxation of benefits Pension Allowances – Annual Allowance – Lifetime Annual Allowance – Money Purchase Annual Allowance The Guidance Guarantee What you should be doing – Personal contributions – Reviewing default risk – still appropriate ? 2

3. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Arthur J. Gallagher (Employee Benefits) Authorised and regulated by the Financial Conduct Authority Part of Arthur J. Gallagher, one of the largest insurance brokerage and risk management organisations in the world Experts in employee benefits and wealth management Agreed service programme in place funded separately by DLA Design Group 3 Employee Benefits Consultants

4. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Life expectancy has been increasing and will continue to do so If the average person retires at age 65, they are likely to spend 19 years in retirement State unable to pay for the retirement lifestyle we expect Source: Office for National Statistics Your retirement

5. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Source: Office for National Statistics How many years have you got left? 90 80 70 60 50 40 30 20 10 0 Life expectancy (years) Current age (years) MaleFemale 0 10 20 30 40 50 60 70 80 90 100

6. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Long term investment plan Choice of investments depending on your approach to risk Value of investments fluctuate Tax advantages Employer contribution Access from age 55* Designed to be used to provide a retirement income * it is proposed that this age will increase in line with the State Pension age What is a group pension?

7. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ What is a group pension? Value of your pension plan Payments made by you and DLA Design Investment performance Retirement income with options to take some as a tax-free cash lump sum Tax relief from the Government

8. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Beneficiaries On death the full value of your pension fund is payable to your chosen beneficiary/ies (subject to Scottish Widow’s final decision) On death your DLA Design Group Life Assurance benefit is also payable to your chosen beneficiary/ies which can differ from the pension beneficiaries (subject to Trustees’ final decision) Death benefits do not usually form part of your estate for IHT purposes Important to update your nomination of beneficiary for pension AND life cover Prevents delays in making payments to dependants 8

9. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Online access SW gives online access to your pension records Review contributions Monitor funds Make fund switches Access retirement planning tools – ‘Retiready’ www.scottishwidows.co.uk 9

10. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Changes to the State Pension age The age you can claim your State Pension depends on when you were born. Men Before 6 December 1953Age 65 Women Before 6 April 1950 6 April 1950 - 6 December 1953 Age 60 Age 60 to 65* Subject to future legislation changes. For more information visit www.gov.ukwww.gov.uk *on a sliding scale depending on date of birth Men and Women 6 December 1953 – 5 October 1954 6 October 1954 – 5 April 1960 6 April 1960 – 5 March 1961 6 March 1961 – 5 April 1977 6 April 1977 – 5 April 1978 6 April 1978 onwards Age 65 to 66* Age 66 Age 66 to 67* Age 67 Age 67 to 68* Age 68 Men and Women Future Increases and the link to life expectancy

11. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ LEGISLATION UPDATE 11

12. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Background Existing rules effectively force many retirees to buy an annuity with their pension pot – Government believes this is too restrictive Government recognises that more choice makes decision making more tricky and has, therefore, announced the ‘Guidance Guarantee’. This will be a free service but will not provide advice service, merely guidance.

13. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ All change from 6 April 2015 Freedom to access defined contribution pension pots as cash if over 55  Known as ‘Uncrystallised Funds Pension Lump Sum (UFPLS)  25% tax free – remainder taxed as income (so could be up to 45%)  New Rules permit part payment but many schemes may not allow this Freedom to transfer to ‘Flexi- Access Drawdown’ (FAD)  Likely to be more flexible and tax efficient but advice recommended  On death, remaining fund can be passed on (free of tax before age 75) Rules introduced to minimise abuse of new system ‘Guidance Guarantee’ for all No change to Lifetime Allowance - still £1.25M

14. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ When Access to your pension account from age 55 It is proposed that this age will increase in line with the State Pension age When Access to your pension account from age 55 It is proposed that this age will increase in line with the State Pension age How - Tax Free Cash Up to 25% of your pension fund can be taken as tax free cash – subject to overall maximum of £312,500 How - Tax Free Cash Up to 25% of your pension fund can be taken as tax free cash – subject to overall maximum of £312,500 When and how can you take benefits? How – Remaining 75% (after April 2015) Withdraw your whole fund Taxed as income – is all in one go tax efficient? What do you intend to do with the money? Withdraw your whole fund Taxed as income – is all in one go tax efficient? What do you intend to do with the money? Buy an Annuity Guaranteed income for life Taxed as income Various options e.g. Spouses pension Buy an Annuity Guaranteed income for life Taxed as income Various options e.g. Spouses pension Take withdrawals from your fund Taxed as income If scheme does not allow, you can transfer to a SIPP No tax on death benefits before age 75 Take withdrawals from your fund Taxed as income If scheme does not allow, you can transfer to a SIPP No tax on death benefits before age 75 Leave your fund invested If you do not need the income immediately Take withdrawals at a later date No tax on death benefits before age 75 Leave your fund invested If you do not need the income immediately Take withdrawals at a later date No tax on death benefits before age 75

15. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Income Drawdown Not new – has been around for 20 years - Can consolidate all pension funds in one place - Advice strongly recommended (legal requirement for defined benefit transfers) - So what is new? New Name – Flexi-access drawdown - New rules allow full flexibility to take funds as and when required*  Drawdown can be planned to minimise income tax  No minimum – no maximum - On death before age 75, no tax on remaining fund (was up to 55%) - Benefits can pass to whoever is nominated – children/grandchildren - Post 75 Fund potentially subject to income tax charge but not IHT  Numerous options available to minimise tax * Subject to individual plan rules and initial/ongoing costs

16. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Improved lump sum death benefit taxation Benefits not yet takenBenefits being drawn on When death occurs Below age 75Above age 75Below age 75Above age 75 Current Rules Can be paid tax free to any beneficiary Subject to 55% tax charge Proposed Rules from April 2015 Can be paid tax free to any beneficiary Lump sum taxed at 45%, reducing to beneficiary’s marginal rate in 2016/17 Can be paid tax free to any beneficiary Lump sum taxed at 45%, reducing to beneficiary’s marginal rate in 2016/17 All lump sum benefits are subject to the Lifetime Allowance

17. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ The Annual Allowance limits tax-relieved payments in a tax year £40,000 p.a.* The Lifetime Allowance may affect you if you have large pension funds £1.25 Million* Exceeding these allowances could result in a tax charge** You should seek financial advice if you believe you may be affected by the Annual Allowance or Lifetime Allowance * 2015/16 tax year ** Tax rules may change The Annual Allowance limits tax-relieved payments in a tax year £40,000 p.a.* The Lifetime Allowance may affect you if you have large pension funds £1.25 Million* Exceeding these allowances could result in a tax charge** You should seek financial advice if you believe you may be affected by the Annual Allowance or Lifetime Allowance * 2015/16 tax year ** Tax rules may change Pension Limits & Tax Implications

18. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Money Purchase Annual Allowance - MPAA Applies to: - Anyone who accesses a pension pot post 5/4/2015 using new freedoms – e.g. takes pot in full or via drawdown - Does not apply if tax free cash plus annuity has been taken or if tax free cash alone is taken (where this is permitted). Limits - Annual Allowance of £40k reduces to £10k per annum and carry forward lost - Special rules apply for those continuing to accrue under defined benefit schemes Will only affect those who wish to access pension pots and continue making substantial contributions

19. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ How do you decide? Guidance Guarantee - Financial ‘guidance’ available via Pension Wise (not advice) - Available to all over age 55 - Citizen’s Advice Bureau for face-to-face discussions - The Pensions Advisory Service for telephone guidance (not advice despite the name!) Regulated/Independent Financial Advice - Financial advice from an FCA regulated, qualified professional - Minimum cost likely to be £1,500 – Specific advice re:  Recommended course of action  Tax consequences  Which financial product or products are most suitable  Pension Consolidation  Ongoing advice if required

20. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Pension planning What should you do? Review all pension arrangements and assess potential future value – consider using Scottish Widows online tools (e.g. Retirement Planning tool) Review current pension contribution levels, use current £40,000 Annual Allowance limit and carry-forward entitlements before 5 April 2016 Beware a breach of the Lifetime Allowance of £1.25 million Beware triggering reduced Annual Allowance by drawing income (not just Tax Free Cash) Take advice on your personal situation if you are unsure how this affects you 20

21. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Personal Contributions 21 Introduced by the government to ensure all Workplace Pension Schemes have minimum levels of contributions: – A Total of 3% (at least 1% paid by the employer) – Increasing to 5% in 2017 (at least 2% paid by the employer) – Increasing to 8% in 2018 (at least 3% paid by the employer) DLA pay 3% pension contribution initially increasing to 5% after 5 years of service A certain level of personal contributions will be required Introduced by the government to ensure all Workplace Pension Schemes have minimum levels of contributions: – A Total of 3% (at least 1% paid by the employer) – Increasing to 5% in 2017 (at least 2% paid by the employer) – Increasing to 8% in 2018 (at least 3% paid by the employer) DLA pay 3% pension contribution initially increasing to 5% after 5 years of service A certain level of personal contributions will be required Auto Enrolment

22. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Summary Reviewing default fund options – Chosen Low, medium and Higher Risk Portfolios at inception – Likely to replace current ‘lifestyling’ arrangement (late 2015?) Review level of contributions being made for your retirement – consider the level of personal contributions required under auto enrolment – consider matching your employer contributions to gain maximum impact Unlikely existing scheme will facilitate the new pension freedoms at least initially so other retirement vehicles could be put in place to gain maximum flexibility 22

23. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Important information This presentation is based on Arthur J. Gallagher’s understanding of current legislation and practices. No liability can be accepted for any error or omission. All benefits and covers referred to in this presentation are examples only and the policy documents and rules will override anything in this presentation This presentation is not designed to replace advice and does not constitute advice. We strongly suggest that you take tax planning or personal financial advice if uncertain of your own position. Your employer retains the right to amend details of any benefit outlined in this presentation. Levels and bases of, as well as reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. Any form of personal pension is intended to be a long term investment that can fall as well as rise in value. Past performance is not necessarily a guide to future returns 23

24. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ 24 Questions?

25. Thank You Judi Miller | Executive Consulting Director Arthur J. Gallagher | Employee Benefits M. +44 (0) 7748 657 693 E. judi_miller@ajg.com

26. ARTHUR J. GALLAGHER | BUSINESS WITHOUT BARRIERS™ Arthur J. Gallagher (Employee Benefits) and Arthur J. Gallagher (Wealth Management) are trading names of Gallagher Risk & Reward Limited, which is authorised and regulated by the Financial Conduct Authority. Not all business carried out by the company is regulated. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered No. 3265272 England and Wales. Tel: +44 (0)20 7204 8990 Fax: +44 (0)20 7204 6001 Web: www.gallaghereb.com 26