[UKT]OST/001/01/PSA/1

The Trustees of the [SCHEME NAME]
[SCH_CONTACT_NAME]
[SCH_ADRNAM]
[SCH_ADDRESS_LINE1]
[SCH_ADDRESS_LINE2]
[SCH_ADDRESS_LINE3]
[SCH_ADDRESS_LINE4]
[SCH_POSTCODE]

Scheme name: [SCHEME NAME]
Scheme number: [Scheme number]
Plan type [plan type long name]

Dear [SCH_CONTACT_NAME] Trustee

Royal London introduces a new form of With Profits

From 1 January 2016 we’re widening the scope of our With Profits business to include more policy types.

I’m writing to you because your pension scheme holds a policy with us that has a With Profits investment in the Royal London Main Fund.

I want to let you know about our plans and confirm that the way we manage existing With Profits investment isn’t going to change.

This will be the first time we’ve introduced a new form of With Profits in over 20 years.
So I’d like all of the existing With Profits policyholders to know about changes we’re making to the Principles and Practices of Financial Management (PPFM) as a result of it.

You can find a copy of the following documents at employer.royallondon.com/wptrustees.

·  Changes to the PPFM booklet

·  Your questions answered

·  Summary of the independent expert’s report

·  View of the With Profits Committee

Why are we doing this?

We already boost the savings of existing With Profits customers by sharing some of our profits with them. However, the number of With Profits customers is falling. As a customer-owned company Royal London can only grow and succeed in the long-term if there are enough customers who can share in our success and growth. To ensure that success, we propose to extend our discretionary profit sharing approach to more of our customers. Importantly, we are doing this in a way which we believe is fair to existing With Profits customers.

The change in detail

We’re expanding our profit sharing approach to offer a new form of With Profits to all new customers who purchase a Royal London workplace or individual pension from the start of 2016. We’re also extending this new form of With Profits to existing customers who’ve bought these types of products from Royal London since the middle of 2001. The policies that qualify for the new form of With Profits will receive a smaller benefit than existing With Profits policies

For example, since 2007 we’ve distributed over £460m of our profits to With Profits policyholders by increasing the investment returns on the underlying asset shares. You’ll have seen this increase referred to as Royal London Profit Share, we previously called it our Mutual Dividend. The Profit Share for 2014 was equivalent to an additional return of 1.15% on the With Profits investment.

The new form of With Profits policies will receive a smaller benefit than existing With Profits policies. For instance, if they’d qualified to receive Profit Share from the start of 2014, they’d have received around 0.15% of the value of their policy, whereas existing With Profits policies received 1.15%.

To ensure that existing With Profits policyholders also benefit from the changes we’re making, we plan to increase the regular bonus on their policies by the same rate we give to the new form of With Profits policies. The effect of this will be to increase the amount we guarantee to pay on a death or maturity claim.

Treating customers fairly

I believe that introducing this new form of With Profits will ensure that we maintain our competitive advantage. This in turn should allow us to maintain, or even increase, the level of Profit Share as new and existing customers share in a bigger and more successful company.

To ensure that all our policyholders are treated fairly, our With Profits Committee enlisted the help of an independent expert, approved by our regulators, to review these proposals.

The independent expert has concluded that the interests of existing With Profits policyholders are not likely to be adversely affected by the introduction of the new form of With Profits. We’ve also been keen to ensure that our regulators are kept informed of our approach and they have confirmed they have no objections. So, I’m pleased to be able to introduce this approach, safe in the knowledge that we are continuing to treat you, the members of your scheme and the other existing With Profits policyholders fairly.

Need more information?

You can find out more information on our new profit sharing approach at employer.royallondon.com/wptrustee, or if you have any questions you can call us on 0345 266 0799.

Yours sincerely

Phil Loney

Group Chief Executive

2TLT1806