New Ideas About the Distribution Phase I ntegrating R etirement Income & DC Plan Design

1. New Ideas About the Distribution PhaseIntegratingRetirement Income& DC Plan Design

2. LIFETIME INCOME ILLUSTRATION Hypothetical example Point of Activation 3 1 4 2 Potential Income Secure Income Build Secure Income Age Accumulation Withdrawal Insurer Payout 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 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insurer pays Income Benefit for life Note: Account balance remaining at time of death is paid to beneficiary and may be withdrawn by participant at any other time with no additional fees.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. S:\paic\March 2012

3. RETIREMENT INCOME ALTERNATIVES 1 GLWB – Guaranteed Lifetime Withdrawal Benefit

4. INVESTMENT & ALLOCATION Phase-In Period Allocation % Age Equity & Bond Portfolios - Custom allocation, low fee e.g. 14bps, no secure income Secure Income Portfolio - 60% equity/40% bonds, higher fee e.g. 120bps, 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 S:\paic\March 2012

5. PROGRAM IMPLEMENTATION Lifetime Income Strategy (LIS) Insurer 1 Aggregator Platform LIS Fund Investment Manager Equity Fund Insurer 2 Participant Bond Fund Insurer 3 Secured Fund • 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 PERSONALIZED SAVINGS, INVESTMENT & INCOME PROGRAM Infrastructure delivers custom built, individual income benefit Participant-specific by date of birth & individual activity

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

7. LIFETIME INCOME DESIGN Obstacles / risks and solutions