Overview of Lockton® Retirement Services

L O C K T O N R E T I R E M E N T S E R V I C E S

Retirement Plan Clients 960+

Retirement Plan Assets $35+ Billion

Lockton Clients 15,000+

U.S. Client Retention 96% (Industry Average 85%)

Associates 6,000+ Associates

Premium Placed $21+ Billion

Revenue $1.241+ Billion

LocationsNorth America, Europe, Latin America, Asia Pacifi c, Middle East

Offi ces 75

Headquarters Kansas City, Missouri, U.S.A.

Ownership Private

Chairman David Lockton

Year Founded 1966

Lockton Motto WE LIVE SERVICE!®

L O C K T O N F A C T S

Scan QR code to view our 2014 Annual Report video

LOCKTON US OFFICES

Minneapolis

Kansas City

Chicago

St. Louis

Atlanta

Dallas

DenverLas Vegas

Phoenix

San FranciscoSan Jose

Los AngelesIrvine

San Diego

San Antonio Houston

South Florida

Washington, DC

New YorkHartford

CharlotteMemphis

PhiladelphiaOmaha

Encino

Fairfax

Boston

Milwaukee

Fort Worth

Nashville

Lockton US Offi ces

Lockton Retirement Services Offi ces

3

Investment Selection and Monitoring Serve as fi duciary investment advisor as defi ned by ERISA 3(21) or

3(38), as appropriate Perform initial due diligence for selection of investment funds and

menu design Provide qualitative and quantitative monitoring of investment

menu advising on watch list and de-selection of funds Deliver quarterly investment monitoring reports using customized

LockSMART® scorecard designed to align with investment policy statement

Keep committee abreast of investment trends and legislation affecting retirement plan investment options

Provide committee with timely economic updates Deliver in-depth research in key areas such as target date funds,

stable value, and alternative investments

Plan Optimization Services Provide plan design benchmarking through Lockton PRISMsm tool Assess employee retirement readiness status, design strategies to

improve projected outcomes Develop multi-faceted employee education strategy to be

implemented through vendor resources Meet with vendor relationship manager, as needed, to review

service offerings and measure effectiveness Access to in-house employee communications practice for

custom needs

Plan Governance Structure Perform compliance and fi duciary assessment using Lockton

MATRIX® tool Assist in formalizing committee structure through drafting of

charter, by-laws, and other formative documents Review and/or develop investment policy statement Draft committee meeting documents including agendas and

minutes Build and maintain Lockton Partner Portal; a web-based,

password-protected central repository for key plan and fi duciary information

Perform fee benchmarking study every three years to help satisfy ERISA 408(b)(2) requirements

HR Team Support Prepare customized Compliance Calendar to include required

notices, fi lings, and audit deadlines Review plan amendments, plan documents, required notices,

contracts, etc. Access to Lockton’s ERISA counsel for guidance related to plan

operations and compliance Keep team apprised of regulatory and legislative changes through

quarterly Ledger publication and Beacon Alerts, as needed Available, as needed, for general plan related questions or service

issues

TYPICAL SCOPE OF SERVICES

4

Plan Success Measures

Just 18% of Americans are very confi dent that they will have enough money to live comfortably in retirement.

– EBRI March 2014

Employee Education & Communication

34% of the middle class expect to work until at least the age of 80 because they will not have saved enough for retirement.

– Wells Fargo Financial Health Savings 2014

Investment Menu

The average 401(k) plan sponsor offers 18.2 investment options, yet the average plan participant is only invested in 3.1.

– Vanguard 2014

Participation percentage

Average deferral rates

Plan-level asset allocation

Revenue-sharing awareness

TYPICAL APPROACH

Fill in all the “style boxes”

Primarily actively managed funds

Diversification focused in domestic equity

Off-the-shelf target date funds

TYPICAL APPROACH

Enrollment meetings during new hire

orientation

Auto-enrollment at less than optimal

deferral rate, no auto-escalation

Focus on participation rather than

employee engagement

Heavy reliance on non-custom vendor

website

TYPICAL APPROACH

Participant retirement readiness; outcomes-based analysis

Deferral rates needed to achieve retirement goal

Asset allocation analysis based on age and salary

demographics

Fund revenue leveling, improve plan expense efficiency

THE LOCKTON ADVANTAGE

Tailor target date solution to meet participant demographics

Full suite of passively managed index funds

Diversification in fixed income and international equity

Consideration of downside risk protection, not just returns

maximization

THE LOCKTON ADVANTAGE

Focus on retirement age outcomes; percentage on-track to

reach income goal

Targeted education campaigns to drive needed behavior

changes

Use of print, mobile, web, and face-to-face communication

methods

Tailored strategy aligned with plan sponsor’s goals and

measured frequently

THE LOCKTON ADVANTAGE

THE LOCKTON ADVANTAGE

5

LOCKTON’S PROPRIETARY TOOLS

RISK ASSESSMENTFiduciary risk management is paramount to Lockton’s daily plan

sponsor services. In assessing where our clients are on the spectrum

of fiduciary compliance and their administrative processes, we utilize

the Lockton MATRIX®, a comprehensive fiduciary checklist designed

to mitigate risk and profile a plan’s overall compliance risk. Lockton MATRIX® evaluates annual notices, plan

documents, fiduciary audit file, annual committee oversight, investments and 404(c) compliance. It produces a

scorecard illustrating to clients where they fall on the compliance spectrum, what risks their current practices

expose them to and recommendations on how to alleviate these risks. Lockton MATRIXSM is revolutionary in its

evaluation of fiduciary compliance and assists firms in their evaluation of their retirement plan management.

PLAN DESIGN AND BENCHMARKINGThe Lockton PRISM® is the newest addition to the Retirement

Services toolbox. The PRISM® comparatively analyzes client plans with same-size competitors and with other

competitors within the industry. We evaluate the same-size peer groups both by head count and by assets. This

tool allows our Associates to benchmark plans in the areas of eligibility and vesting, investments and expenses,

plan participation, plan contributions and plan features. The research for these reports is provided through our

partnership with Fiduciary Benchmarks, Inc. With this data, we perform an analysis and advise on areas for

improvement. We benchmark and expose plan provisions, expenses, participation and various other measures of

success.

INVESTMENT TECHNOLOGYLockSMART® is a strategically designed monitoring tool that helps plan, document and implement a sound

fiduciary process. It closely regulates our clients’ portfolios to ensure their activity matches the standards and

criteria set by Lockton. As part of the overall client-specific LockSMART® investment review, the LockSMART®

Fund Scorecard helps manage key fiduciary responsibilities, under ERISA, of prudently selecting and monitoring a

plan’s investment options.

®

6

QUARTERLY FINANCIAL CHECKLIST

This checklist sets an agenda for quarterly retirement committee meetings and helps document plan topics that should be addressed at least annually. Each quarter’s focus subject is intended to be a primary topic discussion for the committee, though other matters will also be discussed. The checklist may be edited to meet the needs of individual clients.

FIRST QUARTER | PLAN GOVERNANCE

Document Analyze Resources

Committee Charter � Are the actions of the committee consistent with the committee governance provisions?

� Are the committee membership and process descriptions current?

� Are the scope and range of the committee role descriptions current?

Sample Fiduciary Training Brain Shark

Sample Fiduciary Acceptance and Acknowledgement Form

Sample Charter

Sample Board Resolution

Sample Fidelity Bond Checklist

Sample Fiduciary Insurance Evaluation

Committee Meeting Minutes � Are the meeting minutes of the committee approved and retained?

� Has fi duciary training been conducted?

Plan Document

Board Resolutions

� Do plan document provisions and board resolutions address authority?

Third-party Service Agreements � Do third-party agreements include language surrounding discretionary vs. non-discretionary authority/responsibility?

Fidelity Bond � Are all those who handle plan assets bonded?

� Does Fidelity bond meet requirements (i.e., 10% of plan assets, not to exceed $500,000)?

Fiduciary Insurance Policy Indemnifi cations of Fiduciaries

� Is current fi duciary insurance policy in place?

� Is policy amount appropriate for plan changes?

� Does policy identify the correct plans and parties?

� Does the policy include appropriate fi duciary indemnifi cations?

� Who pays for fi duciary insurance?

SECOND QUARTER | FEES AND EXPENSES

Document Analyze Resources

Service Provider Agreements � Are lists of services in provider agreements current?

� Are service providers meeting expectations?

� Has committee reviewed appropriateness of service providers fl oat retention policies?

� What were the dates of the last RFPs for each service provider?

� Are dates identifi ed for future RFPs for each service provider?

Lockton RFP

Fiduciary Benchmarks

408(b)(2) Checklist

404(a)(5) Checklist Service Provider Fee Disclosures

Service Provider Fee Change Notice

Participant Fee Disclosure

Participant Comparative Chart

� If any service provider changed fees, was a change notice received? (“Service providers” receive at least $1,000 for services provided to a plan.)

� Does the plan have excess revenue sharing at year-end?

� Has an annual fee benchmarking exercise been conducted?

� Are plan-paid fees reasonable?

� If current fees do not pass benchmarking exercise, has committee addressed receiving more services, or requesting a fee decrease and/or a share-class change?

Quarterly Benefi t Statements � Do quarterly benefi t statements include information required by 404(a)(5)?

Schedule C from Form 5500 � Were service providers reported on Schedule C?

7

THIRD QUARTER | INVESTMENTS

Document Analyze Resources

Investment Policy Statement (IPS)

Plan Document

Summary Plan Description

� Is date of IPS more than three year ago? If so, revisit.

� Are the investment criteria and objectives current and appropriate?

� Are the investments, benchmarks and investment types current and appropriate?

� Is the menu (number of investments, asset classes and style [active vs. passive]) appropriate for participant population?

� Is investment performance meeting criteria outlined in the IPS?

� Are the retention and removal policies in the IPS current and appropriate?

� Does the QDIA still meet the requirements of DOL Reg. §2550.404c-5?

� Is the investment option(s) for forfeitures and unallocated accounts current and appropriate?

Target Date Selection Tool

Stable Value Selection Tool

Model Investment Policy Statement

FOURTH QUARTER | PLAN ADMINISTRATION

Document Analyze Resources

Form 5500 Auditor’s Opinion � Were contributions and deposits to participant accounts made timely?

� Has statement of activity in trust/custodial account been reviewed?

� Was the annual Form 5500 and audit fi led timely?

Plan Limits

Fiduciary Risk Matrix—DB

Fiduciary Risk Matrix—DC

Missing Participant Checklist

Compliance Calendar

QDRO Resource Package

Document Retention Guide

Plan Document

Recordkeeper’s Service Agreement

� Does plan have a calendar tracking timely delivery of the following disclosures (if applicable):

� QDIA Notice

� Safe Harbor Notice

� Automatic Enrollment Notice

� Participant Fee Disclosure

� Vendor Website Updates

� Summary Plan Description

� Summary of Material Modifi cation

� Summary Annual Report

� Distribution Notice (402(f))

� Quarterly Participant Statements

� Were applicable fund and fee change notices sent to participants?

� Are plan procedures up-to-date for the following:

� Loans

� QDROs

� Hardships

� Document Retention

� Timely Contributions and Deposits

� Rollover Acceptance

� Eligibility

� Cash outs

� Are ERISA Section 404(c) compliance procedures and responsibilities in place?

� Are annual contribution and compensation limit controls effective?

� Did annual testing (if applicable) pass for the following:

� ADP

� ACP

� Top Heavy

� Coverage

� General Nondiscrimination

� Compensation

� Are any plan amendments required?

� Are plan design changes suggested?

8

WHAT CAN THE LOCKSMART® FUND SCORECARD DO?

Can the LockSMART® Fund Scorecard match the monitoring criteria in our Investment Policy Statement? YES

Is it flexible enough to do more than analyze performance returns? YES

Can the scoring of funds be customized based on our committee’s expectations? YES

INVESTMENTS

Core funds are listed with applicable peer group and benchmark.

WEIGHTED PERCENTAGES

Percentages are allocated to each measurement criteria at your investment committee’s discretion. This customization creates a unique scoring measure based on importance.

DOCUMENTATION

Comments are used to document committee decisions, advisor analysis, and recommendations.

ALTERNATIVE FUNDS

Replacement funds are listed and reviewed against the same measurement criteria to ensure it meet the Investment Policy Statement standards.

FUND SCORECARDMEASUREMENT CRITERIA

Up to 10 of the 38 available measurement criteria may be selected to monitor investments and mirror the Investment Policy Statement.

9

Does this help reflect a prudent investment process? YES

Can this be used as documentation of a fiduciary decision-making process? YES

Does it include supporting commentary? YES

WATCH LIST DATE

A date may be documented to designate when funds are placed on the watch list.

SYSTEM/USER ACTION

System and User notations are used when action is taken to replace or maintain a fund.

OVERALL RATING

A pass (green) or fail (red) rating is given, based on a fund’s total score versus your prescribed overall rating percentage. The overall rating percentage is determined by you and may be raised or lowered. Weighted percentages considered as part of the rating equation for a fund exceeding the measurement criteria thresholds selected.

®

10

THE LOCKTON DIFFERENCE

INVESTMENT MANAGER S E L E C T I O N M E T H O D O L O G Y

PROCESS OBJECTIVE

Identify managers who consistently deliver positive excess returns

Rolling standard period returns vs. current standard period returns

40 quarters of rolling period excess returns used to calculate Long-Term Batting Average

Reasonable range of expectations for each investment is determined and Modern Portfolio Theory statistics are

evaluated

Identify managers with consistent above-median performance and minimal bottom quartile history

Qualitative overlay to include style consistency, tactical allocation capability, and organizational/team strength

“Best-in-Class” identification by asset class continuously maintained

PROCESS SUMMARY

Fund menu comprised of options which consistently display above-average performance over full market cycles

Minimize return inconsistency which can lead to plan participant uncertainty and less than ideal individual

investment decisions

DESIRED RESULT

Selection advice delivered to committee as ERISA 3(21) fiduciary

Selections and changes implemented directly on behalf of plan sponsor as ERISA 3(38) fiduciary (full menu or

custom model portfolio)

IMPLEMENTATION OPTIONS

11

SECURE DOCUMENT SHARING AND ONLINE COLLABORATION A single dashboard organizing a client’s specifi c benefi ts information, documents, and tools.

Client-specifi c information is stored on its own secure, online portal accessible anytime and anywhere via the Internet.

Lockton’s compliance resources, regulatory updates, and quarterly newsletters are all accessible through the Partner Portal.

The most updated versions of the client’s documents are available through the portal, ensuring accurate information on its secure site.

Collaboration between the Lockton account team and the client is simple and streamlined with project tracking and shared document features.

PORTALS CAN INCLUDE:

LOCK

TON

INFO

RM

ATIO

N Contact InformationCompliance NewsHome Page

BEN

EFIT

SPR

OG

RAM Plan Documents

Summary Plan DescriptionsParticipant NoticesEnrollment MaterialsVendor Contacts CO

MM

ITTE

E RES

OU

RCE

S Investment Policy StatementCommittee CharterMeeting MinutesDue Diligence Documents

OTH

ERFE

ATU

RES Open Items List

AnnouncementsEvent Calendar

LOCKTON’S PARTNER PORTALS

12

The LedgerFourth Quarter 2014

Summary of Legislative, Judicial, and Regulatory Retirement News

Issued by Lockton® Retirement Services

DEFINED CONTRIBUTION COMPLIANCE CALENDARS

Pages 10-11

INSIDE THIS ISSUE

LEGISLATIVE UPDATE, REGULATORY UPDATE, AND

COURTS UPDATEPages 1-7

JESSICA SKINNER, J.D.Compliance AttorneyLockton Retirement Services816.960.9295 | jskinner@lockton.com

SAM HENSON, J.D.Senior ERISA CounselLockton Retirement Services816.751.2245 | shenson@lockton.com

AUTHORS

L O C K T O N R E T I R E M E N T S E R V I C E S

FIDUCIARY TRAINING MODULEPages 12-15

LEGISLATIVE UPDATE

House and Senate Weigh in on Tax Reform for 2015

On December 11th, the Outgoing House Ways and Means Committee Chairman Dave Camp (R-MI) introduced the Tax Reform Act of 2014 that would significantly change the tax treatment of qualified plans. Among the many proposed retirement provisions:

� Tax deferred employee contributions to defined contribution (DC) plans would be limited to one-half the maximum annual elective deferral amount, and anything above would be required to be Roth.

� For Individual Retirement Accounts (IRAs), income limits for Roth contributions would be eliminated, and new contributions to traditional IRAs would be prohibited.

� Suspend the inflation adjustment for annual plan limits, freezing them for a period of time, and tying future increases to the consumer price index.

� Repeal the early withdrawal penalty exception for distributions taken for first home purchases and educational expenses, and apply the early distribution penalty to governmental 457 plans.

� Allow employees to continue contributing to a plan after taking a hardship distribution.

� Extend the period allowed for employees to pay back outstanding loans, upon plan termination or separation of employment, to the filing due date for the individual’s tax return.

13

OVERVIEW OF LOCKTON EXECUTIVE

BENEFITS PRACTICELockton’s Executive Benefi ts Practice provides corporate clients, shareholders, owners, and executives with solutions in succession, retention, reward, and supplemental benefi t programs.

Our corporate clients and their executive suite turn to us for the design, fi nancing, administration, communication, and reporting of:

Non-qualifi ed Retirement Plans

Supplemental Executive Retirement Plans

Corporate-Owned Life Insurance (COLI)

Bank-Owned Life Insurance (BOLI)

Supplemental or Carve-Out Life and Disability Insurances

Estate and Business Succession Planning

Individual Life Insurance

Individual Disability Income Protection

EXECUTIVE BENEFITS PRACTICE • LOCKTON FINANCIAL ADVISORS

3

NONQUALIFED DEFERRED COMPENSATION

When to use deferred compensation plans and why implement them?

Offering a competitive bene t program for your company gives you an advantage to recruit, reward, and retain your top executive talent.

Alternative accumulation vehicle for employees who cannot take full advantage of a company’s quali ed retirement plan.

Allows certain employees the opportunity to invest pre-tax dollars above the IRS quali ed plan limits.

Allows the corporation the ability to create additional supplemental contributions pre-tax to select employees.

Additional retention reward mechanism to enhance long-term employment and stability of key executive talent.

Supplemental tax-deferral mechanism in conjunction with other corporate compensation and stock plans.

Advantages of NQDC plans

Positions company to effectively recruit, reward, and retain key talent.

Allows highly compensated employees to maximize tax-deferred accumulation and retirement income.

Participants may defer a portion of salary, bonus, or any other forms of compensation as outlined in the nal plan document.

Discretionary employer contribution/match may be facilitated in excess of quali ed plan limits.

Plan may be established to provide participants with elective investment direction options (fund menu).

14

444 W 47th Street, Suite 900 Kansas City, MO 64112 816.960.9000 www.lockton.com

Lockton Retirement Services

SAMUEL A. HENSON

JD, CEBS, RPA, GBAVice PresidentDirector, Legislative & Regulatory Affairsshenson@lockton.com

Professional ProfileSam serves as Director, Legislative & Regulatory Affairs for Lockton Retirement Services. He acts as a subject matter expert on ERISA compliance, DOL/IRS activities, and the legislative landscape. In addition, Sam supervises compliance services for more than 1,000 Lockton retirement clients and 100 retirement Associates.

Prior to joining Lockton, Sam spent almost 10 years with the U.S. Department of Labor’s Employee Benefits Security Administration. While with the DOL, Sam was a Senior Investigator, conducting more than 100 civil and criminal investigations of employee benefits plans, service providers, and fiduciaries. Sam supervised enforcement efforts for benefit plans funded by prevailing wage laws under the Service Contract Act and Davis-Bacon Act.

In his current role, Sam is able to leverage his past experiences to assist employers with reducing their fiduciary risks.

Sam earned his J.D. at the University of Missouri-Kansas City School of Law, and received his B.S. in Political Science from Northwest Missouri State University.

Current and Previous Positions Lockton Retirement Services

h Vice President, Director, Legislative & Regulatory Affairs

h Vice President, Director, Compliance Services h Senior ERISA Counsel

United States Department of Labor—Employee Benefits Security Administration

h Senior Investigator

Education J.D.; University of Missouri-Kansas City B.S. in political science; Northwest Missouri State

University

Professional Designations Certified Employee Benefit Specialist (CEBS),

Retirement Plans Associate (RPA), and Group Benefits Associate (GBA); Wharton School, University of Pennsylvania

Fellow: International Society of Employee Benefits Specialists

APM: American Society of Pension Professionals & Actuaries

Bar Admissions Missouri U.S. District Court Western District of Missouri

Associations American Benefits Council American Society of Pension Professionals &

Actuaries Defined Contribution Institutional Investment

Association International Society of Certified Employee Benefits

Specialists

Securities offered through Lockton Financial Advisors, LLC, a registered broker-dealer and member FINRA, SIPC. Investment advisory services offered through Lockton Investment Advisors, LLC, an SEC-registered investment advisor. For California, Lockton Financial Advisors, LLC, d.b.a. Lockton Insurance Services, LLC, license number 0G13569.

151801 K Street NW, Suite 200 Washington, DC 20006 202.414.2400 www.lockton.com

Lockton Retirement Services

HOYT CONNELL

Vice President Principalhconnell@lockton.com

Professional ProfileHoyt is a Principal with Lockton’s Washington, DC/Tysons Corner, VA offices. With more than 10 years with Lockton, Hoyt’s primary areas of expertise are retirement plan fiduciary consulting, employee benefits, and international employee benefits. Hoyt began his career in investment advisory and insurance more than 25 years ago, and he has developed industry vertical expertise in technology, government contracting, multinationals, not-for-profits and rapid-growth emerging companies.

Hoyt serves as an Investment Advisor Representative and carries FINRA licenses as a Principal in Series 26 and also holds both Series 6 and Series 63.

Hoyt has served on numerous advisory and philanthropic boards.

Linked-in profile https://www.linkedin.com/in/hoytconnell

Education � B.S. in political science; University of Washington,

Seattle � Securities Industry Association Management Series:

Wharton School � Phillips Academy, Andover

Professional Affiliations � Board of Directors, Small and Emerging

Contractors Advisory Forum � Society of Human Resource Management

Mid-Atlantic Chapters Member � International Foundation, Employee Benefits

Specialists Member

Our Mission

To be the worldwide value and service leader in insurance brokerage, risk management, employee benefits, and retirement services

Our Goal

To be the best place to do business and to work

RISK MANAGEMENT | EMPLOYEE BENEFITS | RETIREMENT SERVICES

www.lockton.com

© 2016 Lockton, Inc. All rights reserved. Rev. 03/09/16 u\washared\dds\lockton\retirement\retirement services folder\washington dc retirement services_Hoyt Connell.indd 18634