PENSION

Your Pension. Your Future.

JANUARY 2017

In this issue ...2 Chairman’sintroduction3 WillBrexitaffectmypension?4 2016AnnualReport&FinancialStatements6 Currentissues8 Heretohelp

www.prudentialstaffps.co.uk

For members of the DC Section of the Prudential Staff Pension Scheme

Pension Overview • January 2017 • Prudential Staff Pension Scheme

Welcometothisyear’seditionof‘PensionOverview’themagazineforthePrudentialStaffPensionScheme(theScheme).Thisyearwehaveproducedtwomagazines-oneforthemembersoftheDefinedContribution(DC)SectionandthesecondformembersoftheDefinedBenefit(DB)Section.Thiswillallowustofocusonprovidingyouwithinformationthatisrelevanttoyou.TherewillcontinuetobetheusualmixofSchemespecificandmoregeneralpensionsnews,whichwehopeyouwillfindbothinterestingandinformative.First,letushearfromtheChairman.

Itgivesmegreatpleasuretowelcomeyoutoour2016editionofPensionOverview.InsideyouwillfindarticlesonmattersthatcanaffectyourpensionwithintheSchemeandthelatestfinancialupdates.

Overall,theassetsoftheSchemedecreasedinvalueby£74mduringtheSchemeyearended5April2016.The

DCSection’sassetsincreasedby£32m.TheDBSectionassetsdecreasedby£106.2m,asbenefitpaymentsweregreaterthanthenetreturnoninvestmentsandcontributionstotheScheme.

TheDCSectionoftheSchemecontinuestogrowinbothassetsandmembership.At5April2016,thefundsundermanagementamountedto£251mwithamembershipof6,552.Itisworthnotingthattheyearto5April2016wasvolatilefortheUKandglobalequitymarketswiththesemarketsdeliveringnegativereturns.Hencetheincreaseinthefundwasdrivenbycontributionpaymentsratherthaninvestmentgrowth.Detailsofthefunds’performancecanbefoundonpage5.

DuringtheyearthereweresomechangestotheTrusteeBoard.WilliamRutherford(Director,PrudentialCapitalplc)wasappointedonthe12April2016bytheEmployeemembership.WilliamreplacedLyndaMartinwhoresignedinSeptember2015.JohnPainowasappointedon17July2016bythePensionermembership,replacingBernardDawkins.

ItisalwaysgoodtoknowalittleaboutthepeoplewhoareresponsibleforthemanagementoftheScheme.Tothatendwehavecommissionedaseriesof60secondinterviewswithTrusteeDirectors-startingwithWilliamandJohn,ournewestTrusteeDirectors.BothJohn’sandWilliam’sinterviewsareontheSchemewebsitewww.prudentialstaffps.co.uk.

BernardDawkins,whosetermofofficeceasedon16July2016,servedasaTrusteeDirectorforeightyearsandIwouldliketothankhimforhisvaluablecontributiontotheTrusteeBoard.

OurTrusteeBoardismadeupoftalentedindividualswho,whilstsharingacollectivecommitmenttotheScheme,alsobringawiderangeofdifferingskills,whichassistgreatlyintheeffectiverunningoftheaffairsoftheScheme.

Asusual,thelastyearhasbeenabusyoneforallofusinvolvedintheadministrationandmanagementoftheScheme.IwouldliketoextendmythankstothePensionsManagementTeam,allouradvisersandmyfellowTrusteeDirectorsfortheircontinuedhardworkandsupportthroughouttheyear.

Michael AbrahamsCBEDL

Chairman of the Trustee of the Prudential Staff Pension Scheme

The Trustee BoardTheBoardofPrudentialStaffPensionsLimitedismadeupoftenTrusteeDirectors,sixofwhomareappointedbytheCompanyandfourwhoareelectedbythemembers.

ThecurrentBoardmembersare:

Michael Abrahams CBE DLChairman

David GreenCompanyAppointedDirector

David Higgins CompanyAppointedDirector

David Martin CompanyAppointedDirector

John PainoMemberNominatedDirector

Karen RobinsonCompanyAppointedDirector

William RutherfordMemberNominatedDirector

Andrew SwanCompanyAppointedDirector

Neville Swift MemberNominatedDirector

Deborah Webb MemberNominatedDirector

Trustee advisersTheTrusteeappointsprofessionaladviserstoassistwiththerunningoftheScheme.AfulllistisavailableintheScheme’sAnnualReport&Accounts,butanumberofthemarelistedbelow:

Role Provider

Actuarialadvisers Willis Towers Watson Limited

DCSectionAdministrator The Prudential Assurance Company Limited - MPP Service Centre

Auditor KPMG LLP

Communicationsadvisers ConcertConsulting(UK)Limited

Legaladvisers Mayer Brown International LLP

DCInvestmentconsultants Hymans Robertson LLP

2

2016 MND results TheTrusteerecentlycarriedouttwoexercisestoseeknominationstofilltwoMemberNominatedDirector(MND)positions-onefromthePensionermembershipandonefromtheEmployeemembership.Wereceivedmultiplenominationsforbothvacanciesandthereforeballotswereheldtochoosethesuccessfulcandidates.

EMPLOYEE MEMBERSHIP RESULT

TheTrusteeBoardwouldliketocongratulateWilliamRutherfordonhiselection.Hereceivedapproximately68%ofthevotes.The

othercandidatewasStefanOrbanandwewouldliketothankhimforstanding.

PENSIONER MEMBERSHIP RESULT

Morecongratulations,thistimetoJohnPainowhohasbeenelected,havingreceivedapproximately41%ofthevotes.TheothercandidateswereGaryHoodandRogerSeingierwhowewouldliketothankforofferingtheirservices.

Meet the DC Section Committee TheTrusteehasdelegatedsomeoftheday-to-dayresponsibilitiesformanagingtheSchemetovariousCommitteesmadeupofsmallergroupsofTrusteeDirectors.EachCommitteehastermsofreferencewhichdetailit’sresponsibilitiesandanydelegatedauthority.

TheroleoftheDCSectionCommitteeistooversee

investments,communicationsandadministration.TheCommitteehasdelegatedauthoritytomakeappropriatedecisionsonbehalfoftheTrusteeBoardandlikeotherCommitteeswillreportbackwithupdatesofmeetingsanddecisionstakenormakerecommendations,whereTrusteeBoardagreementisrequired.

Will Brexit affect my pension?FollowingtheannouncementthattheUKwillleavetheEU,manypensionschemememberswillbeaskingthemselves“How does this affect my pension?”

Itisprobablytooearlytopredictwithanycertaintywhatimpactthiswillhave.Intheshortterm,weareenteringaperiodofuncertaintybothpoliticallyandeconomicallywhilstBritainpreparestowithdrawfromtheEU.

TherehavealreadybeenverysignificantmovementsinfinancialmarketssincetheoutcomeoftheEUreferendumwasannounced.TheTrusteerecognisesthattherecontinuestobeuncertaintyaboutthefuture,bothintermsoftheeconomicandregulatoryimpact.TheTrustee,inconjunctionwithitsadvisers,willbecontinuingtomonitorthesituationandtheperformanceofthefunds.

TheDCSectionCommitteeismadeupofthefollowingTrusteeDirectors:

David GreenCompanyAppointedDirector(ChairmanoftheDCSectionCommittee)

Andrew SwanCompanyAppointedDirector

Neville SwiftMemberNominatedDirector

Deborah Webb MemberNominatedDirector

3

5 April 2016 Annual Report & Financial StatementsEachyeartheTrusteeproducestheScheme’sAnnualReport&FinancialStatements.GoingforwardtheaccountswillincludeaChairman’sStatementonGovernanceinrelationtoDCfunds.ItalsonowincludesareportonDBactuarialliabilitiesandinvestmentriskdisclosures.

Asummaryofthefinancialhighlightsandmembershipforthe12monthsto5April2016isshownbelow.YoucanviewthefullReport&FinancialStatementsinthe‘Documents’sectionofourwebsitewww.prudentialstaffps.co.uk.

FINANCIAL HIGHLIGHTS

DC Section) DB Section)Net assets at 6 April 2015 £219.7m £7,167.0m)Contributions received(including Company contributions and additional member contributions)

£41.1m £11.5m)

Transferred-in £2.8m) -Other income (including insurance policy income) £1.6m) -Benefits and payments payable(including pensions, related benefits and administration expenses)

(£10.7m) (£284.0m)

Net return on investments (£3.0m) £166.5m)Net assets at 5 April 2016 £251.5m) £7,061.0m)

MEMBERSHIP

ThemembershipoftheDCSectionofthePrudentialStaffPensionSchemeat5April2016comprisedof:

Employee members 3,960Members with deferred benefits 2,592

CHAIRMAN’S STATEMENT ON GOVERNANCE

TheChairman’sStatementhasbeenpreparedtodemonstratehowtheSchemehascompliedwiththenewgovernancestandardsthatwereintroducedfrom6April2015.ItcoversboththeDCSectionandtheDCassetsheldwithintheDBSection.TheDCassetsheldintheDBSectionarearisingfromAdditionalVoluntaryContributions(AVCs)andTransfers-infromotherpensionarrangements.

Insummary,theStatementcoversfourkeyareas:

1. ThePSPSMulti-AssetLifecycle,whichisclassedastheDCSection’sdefaultarrangement;

2. TheprocessingoftheScheme’scorefinancialtransactions;

3. ChargesandtransactioncostswithintheScheme;

4. TheTrustee’scompliancewiththestatutorytrusteeknowledgeandunderstanding(TKU)requirements.

YoucanviewthefullStatementintheAnnualReport&FinancialStatementswhichcanbefoundinthe‘Documents’sectionofourwebsitewww.prudentialstaffps.co.uk.

INVESTMENTS

INVESTMENT OPTIONS

Choosingtherightinvestmentfund(s)isaveryimportantdecision.TheTrustee’slong-termstrategyistoprovidemembers

withaccesstosufficientinvestmentoptionstoenablethemtoinvestinfundsofappropriatelevelsofliquidityandriskthatcangenerateincomeandcapitalgrowth.Thehopebeingthatthesefunds,togetherwithnewcontributionsfrommembersandtheEmployerCredits,willprovideafundwhichmemberscanuseatretirementtosecureanincome.

Memberscanchoosetheirowninvestmentstrategyfromfundsthatinvestinthefollowingassetclasses:

y UKEquities; yBonds;

y OverseasEquities; yProperty;

y EmergingMarketEquities; yCash;

y DiversifiedAssets; yWith-Profits.

ApartfromthePrudentialWith-Profitsfund,allthefundsare‘whitelabelled’.ThismeansthattheunderlyingfundmanagersandtheallocationtotheirfundsaredecidedbytheTrustee.TheFundFactsheetsprovidedetailsoftheunderlyingfundmanagersandthemostrecentversionsareavailableinthe‘Documents’sectionofourwebsitewww.prudentialstaffps.co.uk.

APSPSMulti-AssetLifecyclefundisavailablewhichallowsmemberstheopportunitytotargetlong-termgrowththroughinvestmentinEquityandDiversifiedGrowthfunds,butwithautomaticswitchingintoBondsandaCashfundasmembersapproachtheirSelectedRetirementAge.

Pension Overview • January 2017 • Prudential Staff Pension Scheme

4

InApril2015,theGovernmentintroducednewflexibilitiesregardinghowmemberscanaccesstheirpensionbenefits.In2016,theTrusteereviewedtheScheme’sdefaultlifecyclestrategy.Followingthisreview,theTrusteeagreedthatthe

currentdefaultstrategywouldbeamended.TheamendedMultiAssetLifecyclefundisexpectedtobeimplementedinearly2017andtargetamorebalancedinvestmentstrategyatretirement.Moreinformationwillbeprovidednearerthetime.

INVESTMENT PERFORMANCE

TheFundFactsheets,thatareproducedforeachoftheinvestmentfunds,provideyouwithperformanceandgeneralinformation.ThetablebelowdetailstheperformanceofeachfundwithintheDCSectionoftheSchemefortheyearto31March2016.

PERFORMANCE OF DC FUNDS

Return for 12 months to 31 March 2016 (% p.a.)

Return for 3 years to 31 March 2016 (% p.a.)

Fund Benchmark Fund BenchmarkCash – active 0.4 0.4 0.4 0.4

Index Linked Gilts – active 2.7 1.9 6.3 5.6

Index Linked Gilts – passive 2.0 1.9 5.7 5.6

Fixed Interest Bonds – active 3.6 3.3 5.2 4.6

Long Dated Gilts – passive 4.1 4.0 n/a n/a

Corporate Bonds – active 0.3 0.5 5.7 4.9

Property – active 11.5 10.6 12.1 13.0

UK Equity – passive -3.7 -3.9 3.9 3.7

Overseas Equity – passive -2.4 -2.6 6.5 6.4

Emerging Markets Equity – active -5.7 -9.1 -2.5 -2.7

Diversified Growth – active -3.7 5.8 3.5 5.8

UK Equity – active -3.9 -3.9 5.6 3.7

Global Equity – active 0.7 -0.5 10.5 8.2

Prudential With-Profits* 5.3 n/a 5.9 n/a

Notes: The performance numbers are for the ‘white labelled’ parent funds in which the members’ underlying fund options are invested. Performance figures are shown gross of fees and may differ slightly from the actual returns achieved by members due to a one day delay in unit pricing and the deduction of management fees. The PSPS Long Dated Gilts - passive fund was launched on 22 April 2013; performance data is therefore unavailable for the three year period.

*Unitised returns for the Prudential With-Profits fund are for the period 6 April 2015 to 5 April 2016 and assume that the contribution was invested, without any allowance made for any explicit charges, one or three years ago and realised to secure benefits at normal retirement age.

InApril2015,achangewasimplementedtotheunderlyingfundsforthePSPSUKEquity–activefund.ThechangeremovedtheMiltonUKIncomefundandintroducedtheSchrodersLifeUKEquityfund.

Volatilityremainedprevalentinmarketsovertheyearto31March2016,withUKequityandglobalequitymarketsseeingnegativereturns.Takingintoaccountthedepreciationofsterling,returnsforsterlinginvestorswerebroadlyflat.

Greekdebtintensifiedduringthesecondquarterof2015asthenewGreekGovernmentfailedtoreachagreementwithitscreditors.ThecrisissubsidedwiththeeventualagreementofanewbailoutinAugust.ConcernsthenshiftedtotheeconomicslowdowninChinaasthecountry’seconomicgrowthfellbelowtheGovernment’s7%targetforthefirsttimesince2009.Thisresultedinequitymarketsagainenduringsignificantfalls.

However,asthequarterworeonconcernsdecreasedwhenthereweresomesignsofstabilisationinChina.

Abackgroundofslowingeconomicgrowthprovedtoughforcommoditymarkets.LowerfoodandenergypricesdepressedheadlineinflationintheUS,UKandEurozone.

Duetolowinflation,theEuropeanCentralbankextendeditsmonthly¤60bnquantitativeeasingprogrammebysixmonthsandinitiallycutitsovernightdepositrateinDecember2015.Withinflationarypressuresremaining,inthefirstquarterof2016,theovernightdepositratewascutfurther.Atthesametime,theFederalReserveraisedUSinterestratesfrom0.25%p.a.to0.50%p.a.IntheUK,thelatestInflationReportfromtheBankofEnglandsuggestedaslowerreturntothe2%p.a.inflationtarget,furtherbolsteringmarketconvictionthatUKinterestrateswillnotberisingsoon.UKCommercialpropertyadvancedsteadilyovertheyear.

5

Current issuesChanges to the DC fundsInOctober2016,weinformedyouaboutsomechangesthathavebeenmadetothefundsyoucaninvestin.Insummarythechangeswere:

y PSPS UK Equity – active fund:Achangehasbeenmadetotheallocationtoprovideabettermixofstocksandmanagementstyles.

y PSPS Total Return Bond – active fund: Thisisanewfundthathasbeenintroduced.

y PSPS Property – active fund:Notificationofatemporarydeferralonredemptionrequestshasbeenapplied.ThisdeferralwassubsequentlyliftedinNovember2016.

Fulldetailsofthechangescanbefoundonthe‘News’articlespageontheScheme’swebsitewww.prudentialstaffps.co.uk.

Your Pension. Your Future.

www.prudentialstaffps.co.uk

Keeping you informed We wanted to let you know about some changes that have been made to the funds you can invest in. These changes affect members of the DC Section of the Scheme.

www.prudentialstaffps.co.uk

Why not boost your pension savings with your bonus?Makingsureyouhaveenoughpensionsavingswhenyouretireisnotalwayssomethingatthefrontofeveryone’sminds.Didyouknow,ifyouareanEmployeemember,thatyoucouldpayinpersonalcontributionsandoneoffcontributionstoboostyoursavingsforwhenyouretire?

WHAT ARE THE BENEFITS OF DOING THIS?

y Thecontribution(s)youpayaretaxfree;

y Itwillprovideyouwithalargerpersonalaccountwhenyouretire;

y YoucanalsocontributesomeofyournonPensionablePaysuchasanybonusyoumayreceive.ThesecontributionsarenotmatchedbytheCompany,butaretaxfree;and

y YoucanelectforallpersonalcontributionstobepaidusingPensionsPlus–pleaseseethePensionsPluswebsitewww.pensionsplusatpru.co.ukforfurtherinformation.

IfyouhaveaccesstoPruSelectorGHOSelectyoucanchangeyourcontributionsviatheseapplications.IfyoudonothaveaccesstoeitherPruSelectorGHOSelectyouwillneedtocompleteaDecisionForm.YoucanobtainaFormfromyourlocalHRteam,whowillprovidereturndates.

Allchangestocontributionshavetobecompletedbythelastworkingdayofthemonthtobeeffectivefromthefirstofthenextmonth.

PleasenotethatyouareresponsibleformonitoringyourpositionregardingtheAnnualAllowanceandLifetimeAllowanceandsubmittingtherelevantinformationtoHMRevenue&Customs(HMRC)wherenecessary.FurtherinformationontheseallowancesisavailableontheScheme’swebsitewww.prudentialstaffps.co.uk.

Protecting your loved onesIftheworsthappens,it’sgoodtoknowthatthoseclosetoyouareprotected.TheDCSectionoftheSchemeprovidesbenefitstoyourSpouse,CivilPartnerand/orDependant(s)ifyouweretodiebeforethem.PartofthesebenefitsmaybepayableasalumpsumatthediscretionoftheTrusteeandnormallydonotformpartofyourestateforInheritanceTaxpurposes.

ItisimportantthatyoucompleteanExpressionofWishFormandmakesureitisupdatedwheneveryourcircumstanceschange.TheFormcanbedownloadedfromthe‘Documents’sectionofourwebsitewww.prudentialstaffps.co.uk.Alternativelyyoucancompleteanon-lineversionbyloggingintothesecurewebsiteandenteringthedetailsontheFormonthe‘MyDeathBenefits’section.

TheForm,oncereceived,letstheTrusteeknowwhoyouwouldprefertoreceiveanybenefits.TheTrusteewillalsouseothersourcesofinformationaspartofitsinvestigationsandisnotlegallyboundtofollowyourinstructions.However,wherenolegaldocuments(suchasaWill)exist,itcanbetheonlysourceof

informationavailabletotheTrustee.

IntheeventoftherenotbeingacompletedExpressionofWishForm,theTrusteehastoactwithoutyourguidancewhenexercisingitsdiscretion.ItisthereforeimportantthatyoucompleteaFormandkeepituptodate.

Pension Overview • January 2017 • Prudential Staff Pension Scheme

6

A new year - let’s start a ‘fresh’When it comes to making decisions about your pension saving, we know how helpful the right information and access to specifically tailored tools can be. That is why in the first quarter of 2017, the Trustee will be refreshing the DC Section of the Scheme website. The new look will be modern, fresh, engaging and easy to navigate. The aim is to:

y Providenewinteractivetools;

y Helpyouunderstandtheinvestmentoptionsavailabletoyou,andwhichfundsbestsuityourpersonalinvestmentpreferences;

y Provideinformationinaneasytounderstandformatwithoutpensionsjargon;

y Provideahighlevelcommentarywithgreaterdetailattheclickofanicon;

y Helpyoutounderstandtheoptionsavailabletoyouatretirement,makingsurethattheinformationisavailable

toyouearlyenoughsoyoucancorrectlyplanyourretirementfundingstrategy;and

y ProvideahighqualitylibraryofinformationrelatingtotheScheme,andtosomeextentthewiderpension’sarena.

Pension wisePensionwiseistheGovernment’sfree,impartialretirementguidanceservicethatisopentoeveryoneseekinginformationabouthowtheycanturntheirpensionfundintoaretirementincome.Ifyouareapproachingretirementyoushouldvisitwww.pensionwise.gov.uk.

When is an app not an app?WHEN IT’S A WEBSITE!

Yoursmartphoneortablet’shomescreenisnotjustforapps.Whateverplatformyouareusing,youcanpinyourfavouritewebsitestoyourhomescreensoyoucanquicklyaccessthem.

Why not put the Scheme website on your home screen? If you have an iPhone follow these simple steps (similar principles may apply for use on other smartphones):

Step 1Openupthebrowserapponyourdevice.

Step 2Inputwww.prudentialstaffps.co.uk.

Step 3Taponthe“Share”iconatthebottom.Thislookslikeasquarewithanarrowpointingupwards.

Step 4

Selectthe“AddtoHomeScreen”icon.

Step 5Tapontheword“Add”intheupperrighthandcorner.

7

SmartPhoneuserscanscanhereforadirectlinktothewebsiteusinganappropriateQRreaderapp.

Here to helpIfyouhaveanyquestionsaboutanyofthetopicsdiscussedinthiseditionofPensionOverview,ortheSchemeingeneral,pleasevisitourwebsite.

Ifyouhaveaquestionthatispersonaltoyouandcan’tbeansweredbythewebsite,helpisavailableMondaytoFriday(9amto5pm)fromyourdedicatedAdministrationTeam.

Writeto: PSPS DC Service Centre Prudential 121 Kings Road (Ground Floor South, A) Reading RG1 3ES

Helpline: 0345 300 2637

Email: PSPSDC.SC@prudential.co.uk

Published by The Trustee of the Prudential Staff Pension Scheme, Laurence Pountney Hill, London EC4R 0HH. Designed and produced by Concert Consulting UK Ltd 2017.

Pensions ManagerIfyouhaveanyquestionswhichcannotbeansweredbyyourdedicatedAdministrationTeam,oryouhaveanyothercomments,youcancontactthePensionsManager,MarionSteel.

Prudential Staff Pension Scheme 3 Sheldon Square Paddington London W2 6PR

Email:hrstaffpensions@prudential.co.uk

A message from the Pensions ManagerStayingintouchandlettingusknowwhenyouchangeyouraddressisveryimportant.Withoutthesedetailsyoumaynotreceivethevaluablebenefitstowhichyouareentitled,oryoumayexperienceadelayinpayment.YoumayalsomissoutoncrucialinformationandupdatesabouttheScheme.

ThewayyoucanadviseusofchangestoyourpersonaldetailsisdependentonyourstatusintheScheme:

IF YOU ARE AN ACTIVE MEMBER

YouwillneedtoadviseyourlocalHRdepartmentwhowillinformtheScheme’sdedicatedAdministrationTeam.

IF YOU ARE A DEFERRED MEMBER

Youcanupdatesomeofyourdetailswithinthesecuremembers’areaaccessedthroughtheScheme’swebsitewww.prudentialstaffps.co.uk.Youwillneedtoclickonthe‘Manageyourpensiononline’buttononthelefthandsideofthewebsite.

You may also wish to visit the secure area of the website www.prudentialstaffps.co.uk and update your email and mobile phone details. We will then be able to contact you electronically as well.

MarionSteelisthePensionsManagerforthePrudentialStaffPensionScheme.Sheisresponsiblefortheday-to-daymanagementoftheScheme,supportingtheTrusteeinensuringthattheSchemeoperateseffectively,aswellasconsideringhowtheScheme’soperationsshouldevolveovertime.Outsideofwork,Marionenjoysmusic,cooking,cycling,andspendingtimewithfamilyandfriends.

Pension Overview • January 2017 • Prudential Staff Pension Scheme

8