Visit the Plan website at: YOUR PENSION PLAN NEWSLETTER JANUARY 2019 FIRTH RIXSON RETIREMENT

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1 YOUR PENSION PLAN NEWSLETTER JANUARY 2019 FINANCIAL HEALTH CHECK FIRTH RIXSON RETIREMENT BENEFIT PLAN PROPOSED CHANGES FOR ACTIVE MEMBERS DB SECTION + LOTS MORE Visit the Plan website at:

2 02 03 MEMBERS MESSAGE PLAN NEWS I m pleased to introduce your newsletter for the Defined Benefit (DB) section of the Firth Rixson Retirement Benefit Plan (the Plan). INSIDE YOUR NEWSLETTER, WE COVER: Plan news Page 3 The Plan s financial health check Page 4 The Plan s accounts Page 9 The Plan s investments Page 10 Consultation for active members Page 11 Who looks after the Plan? Page 12 How can you spot a pension scam? Page 13 Your income in retirement Page 14 This newsletter is a useful summary of what has happened to the Plan over the last year and what s in store for the future. Please let the pensions team know if you have any feedback or questions and they will be happy to discuss these with you. Their contact details are on the back page. John Cason Trustee Chairman NEW MEMBER NOMINATED TRUSTEE DIRECTORS Welcome to Jamie Sheppard and Lynn Rawson, who were elected to join the Trustee Board last year. Jamie is based at Meadowhall and Lynn is based at Darley Dale. We are really pleased to be able to expand the Trustee Board with two more knowledgeable and enthusiastic members. NEW DATA PROTECTION LAWS Earlier this year the Trustee issued updated information about how they use and protect the personal information they hold. Data security is taken very seriously, and you can find a full copy of the Plan s Data Privacy Notice on the Plan s website by clicking on the Data Privacy Notice link at the bottom of the screen. INVESTMENT CHANGES Some members have paid or are paying in Additional Voluntary Contributions (AVCs) to the Plan, which previously went into pension accounts with Friends Life. Last year, Friends Life was bought by Aviva so, going forward, the information you receive about your AVCs will come from Aviva. Aviva also has a website called MyMoney where you can set up online access to your pension account, where you have paid AVCs. The link to MyMoney can be found on the Plan website - click on AVCs, then click the MyMoney link. There were also some investment changes made to the AVC accounts with Aviva, and you will have received separate information about these changes during December 2017 and January STATE PENSION Do you know what your State Pension will be when you reach State Retirement Age? You can get an online forecast and more information at: For many people, their State Pension is the foundation of their retirement, so it is important you know how much yours will be.

3 04 05 THE PLAN S FINANCIAL HEALTH CHECK The latest health check, called an Actuarial Valuation, was carried out as at 5 April 2017, and the results are shown over the next few pages. THE PLAN S CURRENT ASSETS AND LIABILITIES (DB SECTION) To check the Plan s financial health, the Trustees and Advisors estimate the cost of the pension promises. This is then compared to the money held by the Plan. If the estimated cost of the pensions is greater than the money held by the Plan, the Plan is said to be in deficit. The cost of providing the pension benefits earned/being earned in the Plan are known as the Plan s liabilities. HOW IS THE PLAN S FINANCIAL SECURITY MEASURED? The Plan currently receives contributions from both active members and the Company, which are invested to provide the pension benefits. The money in the Plan is known as its assets, and it is held for the benefit of all members. As at April 2017, the Plan had built up pension promises worth 344.4m. These are called the Plan s liabilities. The amount of money and investments held by the Plan at that date was worth 301.2m. This meant the Plan had a deficit of 43.2m, which is a funding level of 87%. The previous full valuation was carried out as at April 2014, when the deficit was 17.8m and the Plan had a funding level of 94%, so the Plan s deficit has increased between 2014 and Assets 301.2M Money in the Plan Liabilities 344.4M Benefits to be paid 43.2M Plan deficit

4 06 07 WHY HAS THE DEFICIT INCREASED? Low interest rates mean that the Plan needs to put aside more money now to pay out pensions in the future. If you promised to pay 100 to a friend in 10 years time, and you were confident that interest rates would be around 5% a year, you could put aside a smaller amount of money now probably around 60. If interest rates did stay at this level, you would be able to pay your friend 100 in 10 years time without having to put any more money aside. However, if you thought you would get little or no interest for the next 10 years, you would probably have to put aside close to 100 now. The cost of the Plan s pension benefits is valued using something called gilt yields which are very closely linked to interest rates. Gilt yields have been much lower than expected, so the current cost of providing the pension benefits has increased. The good news is the funding position of the Plan has improved between April 2017 and April As at April 2018 the deficit dropped to 33m and the funding level increased to 90%. PENSION PROTECTION FUND (PPF) The Trustees are required to tell you what would happen if the Company was to go out of business. They are not expecting this to happen, but if it did, the Trustee would look at whether benefits could be bought from an insurance company, using the money held by the Plan. Buying a pension from an insurance company can be expensive so, on this basis, there would be a deficit of 144.6m and a funding level of 68%. If the Company was to go out of business and there was not enough money to buy members benefits with an insurance company, further protection would be available from the PPF. The PPF is designed as a safety net for members of DB schemes, if their employers become insolvent and are unable to pay the pension benefits promised. Further information is available on the PPF website: WHAT IS BEING DONE TO CORRECT THE SHORTFALL? The Trustees have agreed a payment plan with the Company, which they expect to eliminate the deficit by 5 July The Company has agreed to pay into the Plan the equivalent of 8.5m a year, from 1 June 2018 to 5 July This is in addition to future service contributions for active members, and the running costs of the Plan.

5 08 09 THE PLAN S ACCOUNTS MEMBERSHIP During the year, the total number of members in the DB section of the Plan fell from 4,732 to 4, ,732 MONEY IN AND OUT OF THE PLAN (DB SECTION) Money paid in: + 6m The value of the Plan in 2017 was: 303m Investment returns of: +8m Giving a Plan value in 2018 of: 300m ,517 Money paid out: - 17m THE PLAN S INVESTMENTS The Plan s investments have done well over the last year, returning 2.4% against a benchmark (or target) of 2.2%. A more detailed breakdown is shown below: Investment manager Returns (%) Fund benchmark (%) Growth assets LGIM (Global Equity) Longbow (Real Estate Debt III) Longbow (Real Estate Debt IV) Majedie (UK Equities) BlackRock (Diversified Growth) M&G (Secured Loans) Aviva (Multi-Strategy) Risk-reducing assets Insight (Buy and Maintain Bonds) LGIM (Index-Linked Gilts) LGIM (Fixed-Interest Gilts) Plan Total INVESTMENT STRATEGY At April 2017 the Plan held approximately 47% of investments in growth assets, and 53% in risk-reducing assets. However, since then the Trustees have proceeded to work with their advisors to take advantage of new investment approaches which will better suit the Plan in the future. You will see the result of these changes in the newsletter which will be made available to you in 2019.

6 10 11 WHO LOOKS AFTER THE PLAN? CONSULTATION FOR ACTIVE MEMBERS The Company has announced its intention to change where and how future pension benefits build up for current employees. This proposal means that active members (those currently employed by Firth Rixson) would no longer build up any further benefits in the Plan. Benefits already built up in the Plan would stay in the Plan and continue to be looked after by the Trustees. The Trustees have not been asked to consent to the change, and the Company is communicating directly with current employees. Deferred and pensioner members are not impacted by this proposal. If you are a current employee and you have any questions about this proposal, please contact the Company on pensionqueries@arconic.com The Plan is run by a Board of Trustees. Some are chosen by the Company, and some are nominated by members of the Plan. Company nominated Trustees: Bill Ashburner (independent) Bob Bayliss (pensioner) John Cason (pensioner, Chairman) Mike Richards (pensioner) Chris Williams (active) Lee Shaw (active) Member nominated Trustees: Bettina Bellamy (active) Dave Bristow (active) Ray Connelly (pensioner) Kenny Gilberthorpe (active) Jamie Sheppard (active) Lynn Rawson (active) The Trustees are assisted by professional advisors. Further details about the advisors can be found in the full Annual Report and Accounts, available from the pensions team. Their contact details are on the back page.

7 12 13 HOW CAN YOU SPOT A PENSION SCAM? Scammers are using increasingly sophisticated tactics to try to con you out of your pension savings. In 2017, each victim of pension scams lost an average of 91,000. It is important to be vigilant and look out for these key warning signs: YOUR INCOME IN RETIREMENT No matter how near or far away retirement may seem, it s good to have an idea of when you re planning to retire and where your retirement income might come from. It is likely to come from a mixture of private pensions and the State Pension. Scammers might: Say they can help you access your pension before age 55 (this is usually not possible unless you are in poor health). Pressure you into to transferring your pension quickly for a seemingly too good to be true offer. Claim to know of loopholes that would allow you to get more than the usual 25% tax-free cash lump sum. Other warning signs: When a firm doesn t want, or allow, you to call back. Being approached out of the blue over the phone, via text message, , or in person door-to-door. The government has introduced a ban on pensions cold-calling to help tackle this. Where the only contact details available to you are a mobile number and a PO box address. WHAT IS YOUR RETIREMENT AGE? You may be surprised to find out that the age at which you can receive your State Pension may be different to the age at which you can receive your private pension. YOUR FIRTH RIXSON PENSION Currently, you can take your Firth Rixson pension from the Plan at any time from age 55 you don t have to wait until your State Pension Age to claim it. However, the government is looking to increase this minimum pension age so that it stays 10 years before State Pension Age. It s also important to remember that the later you take your pension, the larger it will be. If you would like more information about taking your retirement benefits from the Plan, then please contact the pension team using the details on the back page. INDEPENDENT FINANCIAL ADVICE It is advisable to seek financial advice before transferring your pension, and it is a legal requirement if you are transferring savings over 30,000. Only use a financial advice firm that is regulated and authorised by the Financial Conduct Authority (FCA). The easiest way to find a registered advisor in your area is to look on unbiased.co.uk YOUR STATE PENSION The age at which you can receive your State Pension varies and could be up to age 68, based on current rules. How much you receive also depends on many factors during your working life, but is currently up to per week. You can find out more about your individual situation by visiting:

8 MEET YOUR PENSIONS TEAM The Plan is looked after by a team of highly experienced and dedicated people. Altogether they have over 134 years of pension experience! Ellen Ratcliffe Elaine Goddard Stefan Szita Lisa Pound Annette Cooling Linda Warren Group Pensions Manager Senior Pensions Officer Pensions Officer Pensions Officer DC Administrator Pension Fund Accountant The whole team pride themselves on giving you the best possible service in a friendly and approachable way. You are more than welcome to call, or visit in person. If you would like to visit, then please let them know in advance so they can make sure someone is available to meet with you. Their contact details are: Telephone: FFHGrouppensions@arconic.com Address: Unit 36, Jessops Riverside, 800 Brightside Lane, Sheffield S9 2RX Designed and Produced by AHC DB Newsletter