1St Employee Forum Faqs

Pension Review

1st Employee Forum FAQs

Contents

1Consultative

1.1Change statement

1.1.1When will we be getting our individual statement of how the pension change will affect each one of us?

1.2Pension Review helpdesk

1.2.1When is the helpdesk number effective from?

1.2.2The helpdesk opening hours to be more flexible over the period to recognise home based employees and those in offices who would not want to be overheard during working hours. Suggested that maybe evening and weekend option is available (but not for the whole period).

1.3Modeller

1.3.1Will suitable on line calculators be provided so that members can model future levels of contribution and compare what they would need to invest to obtain comparable benefits under the DB schemes?

1.4Process

1.4.1Will the professional input provided by Mercer at the forthcoming pension tutorials be available to forum members for the remainder of the consultation period?

1.4.2Is there an alternative proposal if this one is rejected?

1.4.3What kind of reactions is the company expecting to the proposals?

1.4.4Can the ECCs have advance notice of when the roadshows are going to take place?

1.4.5How often will FAQs be updated and will this be a live document as it was on the [relocation to the] Frimley site?

1.4.6Why have Siemens UK not set up a Works Council as they have in Germany where there are reps from each of the Siemens organisations speaking on behalf of their organisations directly to someone like Alan or Andreas?

1.4.7If there was a major change agreed due to this consultation, would we have to go through the whole consultation process again?

1.4.8As some of the representatives are not in the DB scheme they should receive a copy of the communication that went out to DB members.

1.4.9Is the company's proposal already a “done deal”?

1.4.10Timing and location details of the road-shows – can we influence the agenda / be involved in presenting. How long will they be?

1.4.11What is expected at the next forum meeting, that takes place on the 19th July 2007. Is it possible for an agenda to be prepared and sent to us prior to the date?

1.4.12Why is there not a national consultation taking place regarding this matter?

1.5Siemens abroad

1.5.1Are these proposals happening just in the UK or will this affect Siemens pension schemes globally, if so, to what extent?

1.6Siemens and Government

1.6.1How does Siemens reflect its views to Government regarding pension issues?

1.7Support to employees

1.7.1At the end of this process, what happens if someone forgets to make a decision, will they default into the Investor Plan?

2Existing scheme

2.1Deferred benefits

2.1.1If a person’s salary reduces after the end of 2007, for example due to their taking a position of less responsibility or working reduced hours (e.g. part-time working) will the DB pension still be based on the basis of their salary as at 31st December 2007? Will statutory revaluation also apply to that value?

2.1.2If a person worked for X years post 31.12.07 and then left the company’s employment (i.e. did not retire) – would the basis of their pension be the “linked salary” (i.e. it increases every year during his X-years (to a maximum of 15 years) up to the time of their leaving or would it revert to the Final Pensionable Salary as at 31.12.07 + statutory revaluation?

2.1.3When was the statutory revaluation basis last amended, and is this reviewed annually?

2.2Deficit

2.2.1Is there a difference between the deficit (2006 figure £539m) and the “balance sheet” deficit which the company will close in December 2007 or are they the same figure (NB accepting that the £539m figure has reduced during the last 12 months?)?

2.2.2After the Company has zeroed the deficit, if the scheme achieves a surplus, is the scheme going to fund our benefit, but also offset the cost of the 3000+ employees who are currently out of scope?

2.2.3What measures are in place to deal with the deficit of those employees who are out of scope of the review once the initial deficit has been paid off?

2.2.4Where will the money come from to pay off the outstanding deficit?

2.2.5If the company is proposing to pay off the deficit, why is it that they cannot do this year after year to enable the Final Salary schemes to continue?

2.2.6How does the pension deficit show in the company’s accounts?

2.2.7In regards to paying the pension fund deficit each year, is this based on a statement of intent or is there a legal contract that has been drawn up?

2.3Out of scope

2.3.1Will people who are outside of the review, get an indication of how much their package is worth, as this will be significant now?

2.4Review

2.4.1What other options of pension reform were examined by the company and why was this present course of action deemed the best solution?

2.5Statements

2.5.1When pension benefit statements are issued will I receive 1 or 2 statements?

3Investor Plan

3.1Death benefits

3.1.1What are the impacts of other pension related benefits such as death in service? Will this be impacted by the proposals?

3.1.2What is happening in regards to the life assurance element of the pension scheme?

3.2Enhancement

3.2.1For younger members they will lose the enhancement after 15 years and for their remaining service the deficit between the DB and DC benefit will continue so the long term attractiveness of the proposal is not so good?

3.3How the Investor Plan works

3.3.1What happens in the event of illness (I believe under the current rules a pension equal to the projected amount to NRA would be paid if an individual were unable to work due to illness)? What will now happen in the DB scheme and what happens in the DC scheme (i.e. a worked example of an ill health retirement would be helpful)?

3.3.2Will employees be made aware of the change in their actual salary due to the additional contributions they will have to make into the DC scheme?

3.3.3How frequent will it be possible for employees to change both their level of contribution and type of investment fund?

3.3.4If employees have only a short time to go [to retirement] e.g. 18 months they will only build up a small benefit so is it worth it? In such cases would they have a refund of their contributions or do they have to buy an annuity which would be miniscule?

3.4Investment options

3.4.1What has been the typical rate of return under the Investor Plan currently (either an average or by different type of investment fund)?

3.5My choice

3.5.1When the scheme changes on 1 January 2008, can you only join via My choice? I’m not currently a member of the DB plan via My choice and do not wish to enter My choice.

3.5.2If employees decide to take on the new DC terms, will this have to be done via My choice?

3.6State Second Pension

3.6.1What is the State Second Pension?

3.6.2Do National Insurance contributions change from DB to DC scheme?

3.7Transfer

3.7.1Can you transfer your DB benefits to the DC scheme? How will this affect the pension fund when I retire if I do this?

1 Consultative

1.1 Change statement

1.1.1 When will we be getting our individual statement of how the pension change will affect each one of us?

A series of generic examples showing the effect of the proposals on members in different circumstances will be outlined in the next issue of the newsletter “Pension Review”, at the end of July. At the same time, further examples will be available online.

An online tool will be available after the end of the consultation period, based on the final outcome of the consultation on the proposals, and before any member has to make a decision about their future contributions. After the end of the consultation, an indicative benefit statement of your current benefits will be issued based on service to 31 December 2007. Final statements will be issued after 31 December 2007.

1.2 Pension Review helpdesk

1.2.1 When is the helpdesk number effective from?

As planned, the Pension Review helpdesk was available from 21 June 2007. The helpdesk can be contacted by telephone (internal tel.: x 720 5555 (option 6), external tel.: 0845 603 9972) or by email .

1.2.2 The helpdesk opening hours to be more flexible over the period to recognise home based employees and those in offices who would not want to be overheard during working hours. Suggested that maybe evening and weekend option is available (but not for the whole period).

These potential issues have already been addressed by offering employees the option of calling the Pension Review helpdesk out of hours and leaving a message with their details and a convenient time for the Helpdesk to call back. Employees can also email the Helpdesk. The volume of queries will be evaluated and the Helpdesk opening hours re-considered if this is appropriate.

1.3 Modeller

1.3.1 Will suitable on line calculators be provided so that members can model future levels of contribution and compare what they would need to invest to obtain comparable benefits under the DB schemes?

An online tool will be available as soon as possible after consultation ends, based on the final outcome of consultation on the proposals - before any member has to make a decision about their future contributions. Generic examples will be provided before then, at the end of July. The final specification for the modelling tool cannot be agreed until the outcome of consultation is known.

1.4 Process

1.4.1 Will the professional input provided by Mercer at the forthcoming pension tutorials be available to forum members for the remainder of the consultation period?

Mercer will be running roadshows in August to explain the Company's proposals to members.

1.4.2 Is there an alternative proposal if this one is rejected?

The Company has a comprehensive consultation programme planned designed to give members the chance to give their views and seek clarification on the Company's proposals. The Company will consider and respond to views expressed. However, consultation is not negotiation - it is a dialogue and exchange of views. Ultimately, it will be for the Company to decide how to proceed - including making alternative proposals / modifying existing proposals, if appropriate, once it has considered the input from members. The consultation period was extended to 90 days (rather than the statutory minimum of 60 days) in order to give more time for this dialogue to take place.

1.4.3 What kind of reactions is the company expecting to the proposals?

While the Company's proposals do represent a change, the Company is continuing to provide significant ongoing financial help to employees to build up their pension savings. The Company believes employees will understand the need for change and will recognise the ongoing contribution being made.

1.4.4 Can the ECCs have advance notice of when the roadshows are going to take place?

Yes, these are currently being planned for August. Details will follow.

1.4.5 How often will FAQs be updated and will this be a live document as it was on the [relocation to the] Frimley site?

The FAQs online will be regularly updated and can be found on the Corporate Shared Services Pensions website.

The first set of FAQs was published on the intranet on 21 June, and the next set will be published on 19 July. The FAQs will be further updated following feedback from the 19 July Forum meetings.

1.4.6 Why have Siemens UK not set up a Works Council as they have in Germany where there are reps from each of the Siemens organisations speaking on behalf of their organisations directly to someone like Alan or Andreas?

The UK has a different employee consultative / legislative framework to Germany and the existing consultative mechanisms reflect this. It is, therefore, neither practicable nor appropriate to follow a German model. The pensions review has covered seven pension schemes and although there are some common issues between the schemes, there are many more issues that are specific to each scheme. Each business has well established processes for communicating and obtaining feedback. There are established bargaining units capable of reflecting individual concerns and circumstances of businesses at a local level.

1.4.7 If there was a major change agreed due to this consultation, would we have to go through the whole consultation process again?

The Company would take advice on whether consultation would need to be repeated, but it is likely that any change would be covered within the existing process.

1.4.8 As some of the representatives are not in the DB scheme they should receive a copy of the communication that went out to DB members.

Representatives for employees not in one of the defined benefit pension schemes covered by the pensions review will be provided with the communications given to defined benefit scheme members who are covered by the pensions review. These will be distributed by the chairman of each consultative committee.

1.4.9 Is the company's proposal already a “done deal”?

No, the Company has a comprehensive consultation programme, designed to give members the chance to give their views and seek clarification on the Company's proposals. The Company will consider and respond to views expressed. However, consultation is not negotiation - it is a dialogue and exchange of views. Ultimately, it will be for the Company to decide how to proceed - including making alternative proposals / modifying existing proposals, if appropriate, once it has considered the input from members. The consultation period was extended to 90 days (rather than the statutory minimum of 60 days) in order to give more time for this dialogue to take place.

1.4.10 Timing and location details of the road-shows – can we influence the agenda / be involved in presenting. How long will they be?

Roadshows are currently being organised and Forums will be kept aware of progress. It is expected that sessions will last around 1.5 hours each and that presentations will be undertaken by a representative of the Company along with an external professional. In order to ensure we communicate a consistent message on the review it will not be practical to allow employee forum members to contribute to the presentations. They will of course have the opportunity to be involved and raise questions.

1.4.11 What is expected at the next forum meeting, that takes place on the 19th July 2007. Is it possible for an agenda to be prepared and sent to us prior to the date?

There will be an agenda for each forum meeting, which will be sent in advance of the meeting together with briefing papers where appropriate. The 19 July meeting will explore feedback from employees following the issue of the consultation literature on 21 June and Forum members will also get answers to questions raised and details of forthcoming communications.

1.4.12 Why is there not a national consultation taking place regarding this matter?

The pensions review has covered seven pension schemes and although there are some common issues between the schemes, there are many more issues that are specific to each scheme. Each business has well established processes for communicating and obtaining feedback. There are established bargaining units capable of reflecting individual concerns and circumstances of businesses at a local level.

1.5 Siemens abroad

1.5.1 Are these proposals happening just in the UK or will this affect Siemens pension schemes globally, if so, to what extent?

Most of Siemens’ businesses worldwide do not operate funded, defined benefit pension schemes.

Siemens has recently reviewed its pension provision in Germany, USA, Austria and Switzerland. The defined benefit pension schemes in Germany and the USA have been closed and this is also in the process of being done in Switzerland, with the aim of achieving long-term sustainable solutions to the problems of volatility and cost.

1.6 Siemens and Government

1.6.1 How does Siemens reflect its views to Government regarding pension issues?

Siemens makes its views known in a number of ways - for example, through participation in the CBI and the National Association of Pension Funds, and communication with the Government Actuary's Department. In addition, as part of the Pension Review, the Company and the trustees held a meeting with the Pensions Regulator on 26 February 2007.

1.7 Support to employees

1.7.1 At the end of this process, what happens if someone forgets to make a decision, will they default into the Investor Plan?

Members will be given support in making key decisions about the level of contributions and investment choices and reminders throughout the process of making decisions. As a safety net, members will be automatically included in the Investor Plan and there will be default contribution and investment choices for members who do not make a decision.

2 Existing scheme

2.1 Deferred benefits

2.1.1 If a person’s salary reduces after the end of 2007, for example due to their taking a position of less responsibility or working reduced hours (e.g. part-time working) will the DB pension still be based on the basis of their salary as at 31st December 2007? Will statutory revaluation also apply to that value?

The defined benefit pensions earned to 31 December 2007 will be based on final pensionable salary as defined by each separate scheme's Trust Deed & Rules as at 31 December 2007. This is the base point to which enhanced and statutory revaluation will be applied.

With regard to a person's salary reducing after 31 December 2007, there are a number of issues to be discussed and resolved but in basic terms the year on year enhanced revaluation will be based on the annual increase / decrease in each member's final pensionable salary at the start and end of each calendar year, i.e. at 31 December 2008. The administrator will compare a member's final pensionable salary as at 31 December 2008 to their final pensionable salary as at 31 December 2007 (the salary figure used to calculate your defined benefit pension earned to 31 December 2007) and work out the increase / decrease in percentage terms. The enhanced revaluation annual increase will be subject to the capped figure of RPI + 2%.

In order to make correct year on year comparisons, it will be necessary to maintain details of additional information post 31 December 2007 such as changes to part-time working hours to ensure the salary figures being compared at the year start and year end are consistent.

2.1.2 If a person worked for X years post 31.12.07 and then left the company’s employment (i.e. did not retire) – would the basis of their pension be the “linked salary” (i.e. it increases every year during his X-years (to a maximum of 15 years) up to the time of their leaving or would it revert to the Final Pensionable Salary as at 31.12.07 + statutory revaluation?

Employees qualify for the enhanced “salary linked” revaluation for up to 15 years or until they stop paying into the pension scheme or cease being employed by the company whichever is the earlier event. Between this event and the member's retirement the basis for revaluing benefits will be the statutory basis i.e. without the additional 2%.