Defined Contribution Pension Solutions Supporting you on every step of the journey

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1 Intended for pension fund trustees and their investment consultants only. Not to be distributed to pension scheme members. Defined Contribution Pension Solutions Supporting you on every step of the journey

2 Welcome The landscape for DC is changing for savers and retirees, for employers and for trustees, and for those who are responsible for managing client assets. At Legal & General Investment Management, we are committed to helping you navigate this changing world on every step of the journey, whatever the size of your scheme and whatever the challenges you face. With over 3,300 1 schemes and more than 2.5 million 1 members to look after, we are driving innovation in the DC market for the benefit of today s savers and tomorrow s retirees. Here you will discover our vision for the future of DC, how we can help you and your members, and more detail about the particular products and services we ve developed in order to meet the evolving needs of your scheme. Emma Douglas Head of Defined Contribution, LGIM 1. Source LGIM as at 30 June

3 DC 2.0 Our vision for DC The UK pensions and savings market is getting to grips with a much more flexible, but also more complex and uncertain retirement landscape. In this new world, finding the right solutions to take DC scheme members to, and through, retirement and support them along the way will be crucial. Legal & General Investment Management are market leaders in UK DC and we are committed to this market for the long term. This means delivering for our clients in three keys areas: Communication: we are helping schemes engage more effectively with their members by listening to their needs, and providing bespoke and innovative member communications. Driven by rapidly evolving technology and changing regulation, this emerging era, that we call DC 2.0, will be much more focused on the needs of individual investors. The customer experience will revolve around simplicity, personalisation and straightforward interaction across a range of channels, including digital media. Administration: we have a range of highly automated, scalable products and services, that help to alleviate the operational, administrative and governance burdens DC schemes are facing. Providers will continue to innovate with new products to cater to all stages of the investment and savings journey. Schemes will be able to offer flexible products for their members and decide what best meets their governance needs. Investment excellence: the most important outcome for members over the long term is the return on their savings. We have a wide range of award-winning DC investment strategies to fit our clients needs, and because of this our clients have entrusted us to manage more pension fund assets than any other UK asset manager Source LGIM as at 30 June 2017 We have developed our platform to ensure that employers, trustees and employees alike have access to a competitively priced, high-quality and well-governed range of pension products that will endure as the savings and pensions landscape continues to change. 3

4 Designed with your members in mind When we think about DC investments, communications or administration systems, we start with the needs of DC savers. It boils down to a simple question: What is most important to your members at the different phases of their savings journey? First step On your way Getting there Arriving Thinking How does this all work? What do I need to do now? I ve come into pensions late is it for me? I ve got other priorities How much have I saved? What s that going to be worth when I retire? Can I change where I m invested? How can I top up my pension? Is my retirement age correct? What are my options for taking my pension? Where am I currently invested and is that right for me? How much will I get from my state pension? Where can I get some help? What option is right for me? Who can help me understand my options? How long will my money last for? How much tax will I pay? Should I take financial advice? Can I change my mind? Doing Register online account Find out about how my money grows Change my contributions Check fund value Use retirement planner/budgeter/compass tool/investor profiler tool Find out where I m invested Select different investment fund Transfer other pensions Check fund value Model different retirement options Change retirement age Choose different investment fund Get a state pension forecast Take financial advice Use longevity calculator and total wealth estimator Consider my other income Get financial advice Review my income on an annual basis Feeling Clear Unclear It seems like a good idea to me. This is all a bit complicated. I should do this to plan for my future. I don t think I can afford to do this. I hope I can stop working soon. I m in control and I know what I'm doing. I ll look at my options. Have I saved enough? I m ready to retire. Is this right for me? I got there in the end and I m really glad I did it! 4

5 Communication is key We understand the importance of engaging members to help them achieve better DC outcomes in retirement. Your members will have access to a Members will be able to access their Our retirement planner tool aims to range of our bespoke online tools, pension information on your own help employees plan and model the videos and information to help them secure online microsite. income they could receive at make more informed decisions, retirement. For example, members can: regarding the choice of investments It allows them to manage their account, available to them and the risk they are willing to take. review their choices, and engage with a range of educational resources tailored to the specific stages of the DC savings journey. Project the size of their pension pot at their selected retirement date Calculate the level of income they ll need to maintain their desired standard of living for everything else, there s our member helpline around 100 skilled customer service specialists on hand to help your members whatever the issue, six Explore the options for taking their money days a week, from Monday to Saturday. 5

6 Supporting your scheme We know that running a DC pension scheme is challenging. We have invested in our capabilities in order to provide schemes with our award-winning outsourcing solutions, so that they can pass on the burdens of operation, administration, communication and governance to a skilled and well-resourced asset manager, comfortable in the knowledge that their members are in safe hands. We have highly automated and scalable operations, capable of onboarding hundreds of thousands of employees and supporting them along the way. 95 Employer services staff 38 Member administration staff 7 Investment specialists/bulk fund switch specialists 88 Staff processing quotes and payments 91 Helpline staff 32 Investment operations professionals 43 Operational support staff 1 Outsourcing arrangement for your scheme Source LGIM as at 30 June

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8 Investment philosophy LGIM is a leading provider of solutions for DC pension schemes and we continue to innovate as the market evolves. WHAT WE BELIEVE IN Our overarching philosophy is to provide flexible and tailored solutions to meet our clients requirements. We think that an investment strategy for DC default funds should reflect trends in pensions and savings, changing markets and longevity. Our retirement solutions specialists have developed a range of innovative DC solutions all focused on delivering positive outcomes and value for money for DC members. COSTS AND FEES MATTER We use our scale to keep costs and fees down within our funds, by reducing turnover and limiting the use of derivatives where possible. We do this because we know excessive costs can have a material effect on members returns over the long term. We also believe that growing DC assets should not just be passive money, but should influence the companies DC schemes are invested in. This is why we have a real focus on active engagement using our scale as a major global investor to encourage the companies in which we invest to integrate environmental, social and governance factors into their everyday thinking. SHARING OUR THINKING We believe that staying on top of current trends and leading research into long-term market drivers is essential for delivering good client outcomes. We divide our thought leadership into three streams: Market Insights, Long-term Thinking and Client Solutions. We also share our knowledge and expertise through regular publications, newsletters, training days and industry events. 8

9 Investment solutions Members say returns are what they care about most. Investments are a key driver of long-term DC outcomes, and we offer a wide range of solutions which can be used for a variety of DC investment needs from targeting both income and growth, to solutions for managing your entire journey to and through retirement. LGIM is one of the few investment managers equipped with the range of funds to help scheme members across the entire DC journey. We offer cost effective, reliable index-tracking products, including portfolios managed against alternatively weighted indices, as well as innovative multi-asset, active fixed income and active equity solutions. Funds in focus MULTI-ASSET FUNDS The LGIM Multi-Asset Fund and the LGIM Diversified Fund are designed for investors seeking globally diversified funds that provide exposure to a wide range of asset classes in a cost-efficient manner. They are designed to help pension scheme investors who are looking for long-term growth with less volatility than a pure equity fund. The LGIM Future World Multi-Asset Fund is a globally diversified fund designed for pension savers who wish to go further in integrating environmental, social and governance (ESG) factors into their investment strategy. The LGIM Retirement Income Multi-Asset Fund provides long-term investment growth up to and during retirement, and facilitates the drawdown of retirement income. PATHWAY FUNDS The L&G Pathway Funds are the next step in the evolution of our offering to the DC pension market, designed in response to the Freedom and choice pension reforms. The funds are target-date vehicles designed so that scheme members can invest for their entire journey to and through retirement. They help members to build retirement income and align asset allocation with their chosen retirement goals. FUTURE WORLD FUND The Future World Fund is an innovative solution designed for pension schemes looking for an alternative to a traditional index strategy, while also addressing the long-term financial risks of climate change. The fund increases exposure towards companies which fulfil certain quantitative factors and also targets those which are likely to benefit from the transition to a low-carbon economy. It also incorporates LGIM s Climate Impact Pledge, a targeted engagement process in which we work directly with companies to bring about positive change. 9

10 Your scheme s needs We offer a full range of DC solutions which can be tailored to meet the specific needs of your scheme. Whether you want to outsource your entire pension scheme, or just require access to a range of funds, we have a solution that s right for you. We work with trustees to help them navigate and adhere to The Pension Regulator s DC Code. Our L&G WorkSave Mastertrust is on The Pensions Regulator s approved list. INVESTMENT FUNDS Access to the full range of LGIM DC investment funds Administration stays inhouse or with a third-party provider INVESTMENT ONLY PLATFORM Access to the full range of LGIM DC investment funds as well as external manager funds Opportunity to build bespoke funds blended to meet your scheme s needs BUNDLED TRUST Scheme trustees work with us to access a bundled solution that includes a broad range of funds and full scheme administration Governance remains the responsibility of the trustees GROUP PERSONAL PLAN A completely outsourced solution Contract is with the individuals Overseen by LGIM s Independent Governance Committee MASTERTRUST LGIM s most complete outsourcing DC solution Independent Mastertrust trustees have full responsibility for investment and administration Removes the need for your own trustee board Administration stays inhouse or with a third-party provider Employers can opt for shared governance 10

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12 Active and influential Positive engagement to enhance long-term value. KEY ENGAGEMENT TOPICS IN 2016 Board accountability/diversity LGIM exists to help clients achieve their long-term financial goals. We aim to make a real difference to their lives, as well as to our industry and the wider community. It is a testament to this approach that a significant proportion of our new business comes from existing clients. Mark Zinkula CEO, LGIM WE ALWAYS TRY TO DO THE RIGHT THING Corporate governance: Our clients trust us to manage, safeguard and help grow the value of their assets and effective corporate governance can help us achieve this. We use our scale and influence to ensure that companies integrate material environmental, social and governance factors into their everyday thinking. We are committed to holding boards to account, creating sustainable value and promoting market resilience on behalf of our clients. ACTIVE ENGAGEMENT IN % 23% Executive remuneration meetings held Companies met Companies based outside of the UK Climate change 293 Meetings discussing environmental and social issues 39% UK companies voted against (at least one resolution) UK board directors voted against 89 12

13 LGIM at a glance A major global investor, leading the market in UK defined contribution 951bn A Assets under management 1836 Legal & General Group founded 345+ Investment professionals 2.9% B of the FTSE All-Share Index managed by LGIM 17% C of UK corporate bond market managed by LGIM 2.5m DC members A. Source: LGIM internal data as at 30 June These figures include assets managed by LGIMA, an SEC Registered Investment Advisor. Data includes derivative positions. B. Source: LGIM internal data and Bloomberg LP, as at 30 June 2017 C. Source: LGIM internal data as at 30 September ,300+ DC schemes #1 UK DC pensions manager 400+ D Client servicing support staff D. Source: LGIM internal data as at Q

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16 CONTACT US For further information please contact Rita Butler-Jones, Head of DC Sales: lgim.com Disclaimer Important Information There are no guarantees that objectives will be achieved. This document should not be taken as an invitation to deal in Legal & General investments or any of the stated stock markets. Legal and General Assurance (Pensions Management) Limited ( PMC ) is a life insurance company and carries on the business using a linked policy ( the Policy ), it is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The policy is divided into a number of sections ( the Funds ). Legal & General Investment Management Limited is authorised and regulated by the Financial Conduct Authority, it provides investment and marketing services to PMC. You may not get back the amount you originally invested. The return from your investment is not guaranteed and therefore you may receive a lower or higher return than you anticipated. Past performance is no guarantee of future performance. Our charges may change. Tax rules and the treatment of income and capital gains could change in the future. Inflation will over time reduce the value of your investment in real terms. There will be a variation in performance between Funds with similar objectives due to the different assets selected. The degree of investment risk depends on the Funds you choose. In extreme market conditions it may be difficult to realise assets held for a Fund and it may not be possible to cancel Units at short notice. We may have to delay acting on your instructions to sell or the price at which you cancel the Units may be lower than you anticipated. The value of a Fund s assets may be affected by uncertainties such as international political developments, market sentiment, economic conditions, changes in government policies, restrictions on foreign investment and currency repatriation, currency fluctuations and other developments in the laws and regulations of countries in which investment may be made. Document issued by Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. To ensure quality of service and for the protection of all parties, telephone calls may be recorded.