Lotus Development Pension Investment Plan

1. LIFE AFTER WORK Lotus Development Pension Investment Plan

2. Today’s meeting • The trustees & their role – Andrew Strathdee • Contributions & benefits – Richard Smith, IBM • Investment & managing your account – Rita Galbraith, Fidelity • Next steps – Rita Galbraith, Fidelity Fidelity only gives information about its own products and services and cannot provide investment advice based on your individual circumstances. If you would like advice, please contact a Financial Adviser.

3. Who’s who?

4. Trustee knowledge and understanding The Pensions Act 2004 requires trustees to have knowledge and understanding of the law relating to: Pensions and trusts Principles relating to the funding of occupational schemes Investment of scheme assets Have a working knowledge with their own scheme's policy documents

5. The 11 modules in trustee’s toolkit

6. Trustee toolkit On completion they are awarded with a certificate Currently the trustees are working their way through the toolkit There is also a log of all trustee training carried out through the year Training session at each trustee meeting Trustee workshop every year

7. Contributions to the plan Smart* Contributions - funded by member and company AVCs (Additional Voluntary Contributions) - funded only by member ASCs (Additional Smart* Contributions) - funded by member with company uplift

8. Lotus Smart* contributions How do I know which option I have chosen?

9. Additional Smart* Contributions (ASCs) • You can elect a monthly ASC monetary amount which will be set for the You* scheme year • This will reduce your gross salary in exactly the same way as the Smart* pension contribution • IBM will enhance any ASCs with a 6% uplift that will be added to the amount invested in your fund • Salary Protection Limit – cannot sacrifice more than 50% for all benefits • Further details will be available on the You* website

10. Additional Voluntary Contributions (AVCs) • You can elect to pay AVCs in addition to or instead of ASCs • You can start, stop, increase or decrease contributions any month • Member contributions only (not uplifted by IBM) • Tax relief on contributions but no NI savings • Under current legislation can contribute up to 100% of taxable earnings in main plan, ASCs and AVCs

11. Summary

12. ASC and AVC example - 1 Monthly Salary = £2000 ASC/AVC Contribution = £500

13. ASC and AVC example - 2 Monthly Salary = £4000 ASC/AVC Contribution = £500

14. Death benefits If you die whilst working for IBM, the following benefits are payable to your dependants: • A lump sum from the IBM Group Life Assurance Policy. This is a multiple of salary (2, 3 or 4 times) dependent on your election under You* • Your plan account will either be used to purchase an annuity for dependants or paid as a lump sum All lump sum payments are paid under discretionary trust and are exempt from Inheritance Tax. Have you completed a Beneficiary Nomination Form? Is it up to date?

15. Retirement ages • The Lotus Pension Plan normal retirement age is 60 • The IBM company retirement age is 65 • If you remain employed by IBM after age 60 you may: • Take your Lotus pension immediately, or • Leave your Lotus pension invested until age 75 AND join the main IBM Plan (the M Plan)

16. Further information There are no current plans to change the structure of the Lotus plan. Lotus Pensions website : www.lotuspensions.co.uk IBM Pensions website : www.smartpensionsuk.co.uk Fidelity website : www.fidelitypensions.co.uk

17. Over 50 years’ global investment experience Fidelity International • Fund management • Administration expertise • Over £109 billion assets under management Source: Fidelity. Total assets under management are those managed by Fidelity International Limited (FIL) as at 30th June 2009. Assets and resources as at 30th June 2009 include those of Fidelity International Limited (FIL) and its subsidiaries.

18. Lotus Development Pension Investment Plan £ • Company contributions • Personal contributions • Investment growth £ £

19. Self select investment funds Investment choices or Lifestyle Self select • ‘Hands on’ approach • 9 fund choices • ‘Hands off’ approach • Ready-made investment option • Equities, property, bonds, cash • Annual management charges: 0.30% 0.95% Default investment choice is lifestyle option

20. INFLATION RISK INVESTMENT RISK Risk v reward Balancing risk and reward as retirement approaches

21. £100 invested over 30 years FTSE All Share FTSE All Stocks UK Savings 2500 UK RPI Past performance is not a reliable indicator of future results. The value of investments may go down as well as up and you may not get back the amount invested. Source Morningstar

22. Lifestyle option Automatic investment process Investments will be made to: 60 – default target retirement age Select own retirement age The lifestyle option is an investment strategy driven by your retirement date. If selected it is important that you keep Fidelity informed of any changes to this date. Equities Fidelity BGI Global Equity 50/50 fund Bonds Fidelity Lotus Bonds fund Cash Fidelity Cash Pensions fund

23. Equity fund Cash fund Bond fund Lifestyle option Years from retirement age % Invested

24. Fidelity life funds www.planviewer.fidelitypensions.com

25. Flexibility and options • Leaving the company • leave account balance invested • transfer to another approved pension arrangement • Death before retirement • return of fund • beneficiary nomination form

26. Retirement • When can I take the benefits? • Retirement options • Transfer to a Personal Pension or SIPP • 25% tax free cash lump sum • Annuity purchase – taxed income • Financial advice

27. Basic State Pension – £4,953 pa (2009/2010 for single person) State Pension • Qualifying years - currently 44 years • 30 qualifying years - if you reach state pension age after 6 April 2010 • State pension age - 65 for men - 60 to 65 for women - Gradually increasing to 68 if born after 5 March 1959 • Go to Direct Gov website to use state pension age calculator: http://pensions.direct.gov.uk/en/state-pension-age-calculator/home.asp

28. On-line access – PlanViewer

29. On-line tools & guides • myPlan • Investor Profiler • Retirement Planner • Volatility tool • Investment tutorial

30. Pensions Service Centre 08457 234 235 • Account balance • Personalised illustrations • Fund performance information • Switching & redirecting investments • Investment options • Open UK business days • 8am to 6pm

31. Next steps • Review your personal contribution level • Think about your investment choice • Update your expression of wish • Seek financial advice, if required • Contact the Pensions Service Centre • Lost PIN details • Help with PlanViewer access

32. Fidelity Investments Life Insurance Limited FIL Limited, established in Bermuda, and its subsidiaries are commonly referred to as Fidelity or Fidelity International. Fidelity, Fidelity International and the Pyramid Logo are trademarks of Fidelity International Limited. No statements or representations made in this document are legally binding on Fidelity or the recipient. For your protection and to provide additional security, all calls to the Pensions Service Centre are recorded and possibly monitored. Fidelity only gives information about its own products and services and does not provide investment advice based on individual circumstances. If you would like advice, please contact a Financial Adviser. Tax relief depends on individual circumstances and any changes in the law. The value of investments may go down as well as up and an investor may not get back the amount invested. If the fund you choose invests in overseas markets, changes in rates of exchange between currencies may cause the value of your investment to fall. Investments in small and emerging markets can be more volatile and liquidity may be lower than other overseas markets. Due to the greater possibility of default, an investment in corporate bonds is generally less secure than an investment in government bonds. Past performance is not a reliable indicator of future results. Issued and approved by FIL Life Insurance Limited (FSA registered number 186526). Authorised and regulated by the Financial Services Authority. Registered in England and Wales No. 3406905. Registered Office at: Oakhill House, 130 Tonbridge Road, Hildenborough, Kent, England TN11 9DZ . MDC04018 November 2009 .