This document provides an overview of Redington and BNY Mellon's iRIS pension risk management software. It summarizes Redington's services and experience helping pension schemes meet their goals. It then outlines 5 key challenges schemes face around funding, governance, investment returns, the economy, and the end game. For each challenge, it shows how iRIS provides tools to set goals, monitor progress, measure risk, and simulate scenarios to help schemes navigate uncertainties and stay on track. These include flight plans, risk telescopes, sensitivity microscopes, and scenario kaleidoscopes. The presentation emphasizes iRIS' role in providing clarity, accountability and transparency to pension scheme governance and decision-making.

1. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013
Redington and BNY
Mellon
iRIS Teach-In
5th June 2013

2. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013 2
Examples of Current Clients Acknowledged Excellence
Recent Award Wins
Risk Management Firm
of the Year
Best Consulting Firm
of the Year
Pension Consultant
of the Year
Redington Overview
Investment Consultant
of the Year

3. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013 3
The Evolution of Our Business
21
55
98 100
185
225
250
270
0
50
100
150
200
250
300
2006 2007 2008 2009 2010 2011 2012 Current
GBPmillions
Client size
Trustee –
Full
Advisor
Trustee –
Project
Sponsor
Non-
Pension
Total
> £10Bn 1 2 3 1 7
£5Bn - £10Bn 0 4 1 1 6
£1Bn - £5Bn 7 2 5 6 20
£500m - £1Bn 0 6 1 0 7
< £500m 4 3 1 3 11
Total 12 17 11 11 51
Assets Under Consulting (GBP millions)
Number of Clients
Client Breakdown by Type and Size
1
7
11
17
31
37
44
51
0
10
20
30
40
50
60
2006 2007 2008 2009 2010 2011 2012 Current

4. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013
Who Are We?
4

5. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013
Our Mission:
To Design, Develop, and Deliver the best investment strategies for our clients
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We live in uncertain times...

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People Are Living Longer

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Uncertain Economic Outlook

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Immense Pressure for Schemes
Today the aggregate funding level of pension funds in the FTSE 100 is only 63%

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The Future is Uncertain

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CLEAR GOALS &
OBJECTIVES
ACCESS TO
DERIVATIVE HUB
LIQUID MARKET STRATEGIES
LIQUID & SEMI-LIQUID
CREDIT STRATEGIES
ILLIQUID CREDIT
STRATEGIES
ILLIQUID ALPHA & BETA
STRATEGIES
ONGOING MONITORING
7 Steps to Full Funding
Mission Statement
To help our clients achieve full-funding with the minimum level of risk

12. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013 12
Dynamic
Continuous
Monitoring
Deliver
Develop
Design
7 Steps to Full Funding
"Redington is the only investment consulting firm with a clear and coherent process” Trustee at Law Debenture, speaking of the 7 Steps to Full Funding

13. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013 13
Why do Your Clients Need iRIS?

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Why do Your Clients Need iRIS?

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Challenge 1 – Managing the End Game
Objective Measurement (Assumed) Performance Indicators Performance (31 March 2013) RAG
Funding Objectives
Primary Funding Objective:
To remain fully funded on an Ongoing
(Gilts +60bps) basis.
Expected Returns > Required Returns
Required Return:
Expected Return:
Difference:
Gilts +25bps
Gilts +40bps
+15bps
Secondary Funding Objective:
To build up a sufficient buffer to withstand an
adverse demographic shock and still return to
full funding by 2023.
Expected Returns > Required Returns to return
to full funding by 2023 (following an adverse
demographic shock)
Required Return:
Expected Return:
Difference:
Gilts +129bps
Gilts +40bps
-89bps
Investment Strategy
Actual Returns should exceed Expected
Returns (implying outperformance).
Actual Returns > Expected Returns
Actual Return:
Expected Return:
Difference:
Gilts + xxxbps
Gilts + xxxbps
xxxbps
Risk Budget
The investment strategy should not risk the
deficit worsening by [10%] of liabilities over a 1-
year period (including longevity risk).
VaR95 < 10% of liabilities VaR95: 7.8%
Hedging Strategy
Nominal/Inflation hedge ratio should be
maintained within +/- [5]% of the funding ratio.
Funding Ratio (Ongoing Basis) 106%
Nominal Hedge Ratio (Ongoing Basis) 90%
Inflation Hedge Ratio (Ongoing Basis) 90%
Liquidity
Maintain sufficient eligible collateral to meet
potential margin calls on derivative positions
and cover one-year’s worth of benefit payments
Total available liquid assets £[xxx]m
One-Year Collateral Requirement + One-Year
Cash Flow
£[xxx]m
Status Metric is at or above target Metric is within [10%] of target Metric is more than [10%] away
Strategic Challenge

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Challenge 2 - Governance and Decision Making
Online – login anytime, anywhere Where are you? - Funding Level Tracker
Required Return at Risk and Funding Ratio at Risk
Where are you going? – Required Rate of ReturnClarity, Accountability and Transparency
Operational Challenges

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Challenge 3 – Deficit Funding and Management
General Healthcare Group - Set up clear goals and objectives through Pension Risk Management Framework
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Objective Measurement 17/09/2012 RAG
Funding To reach full funding by 2022 on Gilts + 25bps basis
Market value of assets £103m
Estimated value of liabilities £124m
Funding level 83.4%
Next de-risking trigger 87.0%
Required return to achieve target full funding Gilts + 218bps
Expected return of assets under current strategy Gilts + 207bps
Margin (Expected return less required return) 11 bps
Risk Value at Risk should be less than [24%]
Total VaR95 23.6%
Equity VaR 7.3%
Credit VaR 3.4%
FX VaR 1.2%
Interest Rate VaR 11.6%
Inflation VaR 10.1%
Hedging
Interest rate and inflation rate hedge should be maintained
within +/-10% of Funding Ratio
Nominal hedge ratio (range 73.4% - 93.4%) 69%
Inflation hedge ratio (range 73.4% - 93.4%) 71%
Collateral
Collateral required for equity futures and Synthetic Gilts As calculated by Schroders [£22m]
Total cash available As calculated by Schroders [£30m]
Status Metric is at or above target Metric is within [10%] of target Metric is more than [10%] away
Financial and Economic

18. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013
Challenge 3 – Deficit Funding and Management
General Healthcare Group- Daily monitoring of funding level to implement de-risking as funding level improves
60%
65%
70%
75%
80%
85%
90%
95%
Fundinglevel
Original Strategy
Actual Strategy
De-Risking Triggers
De-Risking Triggers
Re-Risking Trigger
De-Risking Trigger
89.2%
81.0%
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Financial and Economic

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Challenge 4 - Investment Returns
SAA allows agile decisions around the asset portfolioClear required returns to meet future liabilities
Clear accountability of SAA and managers
DevelopedEquities
(Inc. EquityFuture), 8.0%
DevelopingEquities, 2.0%
EuroABS, 4.8%
Property, 6.8%
HedgeFund, 3.5%
ILS, 2.2%
ENWStructuredNote, 0.6%
Cash, 3.8%
Swaps(ex. LinkerAsset
Swaps), 10.9%
UK Gilt, 2.8%
Index-LinkedBonds
+Asset Swaps+Repo, 9.8%
Corporate, 44.8%
Positive Negative Total
Return Over Flight Plan
Required Return
Return Over Expected
Return
Total Return 667 492 466
Gain/ Losson Dollar Overhedge
Index Linked Gilts 8
HedgeFund 10
ILS 20
Property -16
Equity 124
Credit 521
521
124
20
667
492 466
-100
0
100
200
300
400
500
600
700
800
ExcessReturnoverLIBBORinbasispoints
“I think it is a very good document.
In addition, I think more pension schemes should be looking at the
performance of their assets on this basis i.e. with the primary focus
being on risk and on performance against liabilities”
Trafalgar House Pension Scheme
Strategic Challenge

20. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013 20
Challenge 5 – Economy (Financial Markets)
Performance in context of key financial market factors “What if” analysis in context of adverse market scenarios
Sensitivity analysis against interest rates and inflationRisk in context of key financial market factors
Strategic Challenge

21. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013 21
iRIS. Same But Different....

22. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013 22
iRIS. Same But Different
iRIS gives clarity to pension schemes to help them get back on track and reach their goals
Monitor risk. Measure progress. Stay on track.

23. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013 23
Partnership Structure
Custody Client Data Provider
Ongoing monitoring - iRIS
Pension Fund
Redington

24. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013
Key Features of iRIS
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25. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013 25
Step 1: Setting Clear Goals and Objectives
Objective Measurement (Assumed) Performance Indicators Performance (31 March 2013) RAG
Funding Objectives
Primary Funding Objective:
To remain fully funded on an Ongoing
(Gilts +60bps) basis.
Expected Returns > Required Returns
Required Return:
Expected Return:
Difference:
Gilts +25bps
Gilts +40bps
+15bps
Secondary Funding Objective:
To build up a sufficient buffer to withstand an
adverse demographic shock and still return to
full funding by 2023.
Expected Returns > Required Returns to return
to full funding by 2023 (following an adverse
demographic shock)
Required Return:
Expected Return:
Difference:
Gilts +129bps
Gilts +40bps
-89bps
Investment Strategy
Actual Returns should exceed Expected
Returns (implying outperformance).
Actual Returns > Expected Returns
Actual Return:
Expected Return:
Difference:
Gilts + xxxbps
Gilts + xxxbps
xxxbps
Risk Budget
The investment strategy should not risk the
deficit worsening by [10%] of liabilities over a 1-
year period (including longevity risk).
VaR95 < 10% of liabilities VaR95: 7.8%
Hedging Strategy
Nominal/Inflation hedge ratio should be
maintained within +/- [5]% of the funding ratio.
Funding Ratio (Ongoing Basis) 106%
Nominal Hedge Ratio (Ongoing Basis) 90%
Inflation Hedge Ratio (Ongoing Basis) 90%
Liquidity
Maintain sufficient eligible collateral to meet
potential margin calls on derivative positions
and cover one-year’s worth of benefit payments
Total available liquid assets £[xxx]m
One-Year Collateral Requirement + One-Year
Cash Flow
£[xxx]m
Status Metric is at or above target Metric is within [10%] of target Metric is more than [10%] away

26. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013 26
Funding Level
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Funding ratio is as an indicator of the scheme’s health

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2013 2014 2015 2016 2017 2018 2019 2020
GBPMillions
Liabilities Path Actual Liabilities Assets Path Actual Assets
The Flight Plan - Illustrative
Liability Basis
Contributions & Asset Returns
Time Horizon
The Flight Plan acts as a SatNav, informing Trustees where they are, and whether they are on track towards their goals.
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28. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013
SatNav for Pension Schemes
Schemes with a Flight Plan know exactly where they are and can take appropriate investment opportunities when they arise
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29. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013
Three Lenses
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30. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013
Sensitivity Microscope
Interest rate PV01 allows Trustees to understand how sensitive their assets and liabilities are to interest rates and inflation
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31. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013
Risk Telescope
Value-at-Risk allows Trustees to measure risk and understand the impact of their investment strategy on their current position
2.5%
0.5%
0.5%
2.7%
0.4%
3.9%
4.0%
6.2%
7.9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
PercentageofTotalLiabilities
Risk Type
Risk Attribution by Risk Type (% of Liabilities)
Asset Risk
Liability Risk
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32. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013
Scenario Kaleidoscope
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The stress tests allows Trustees to understand how sensitive the scheme is to adverse market scenarios

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Collateral Requirements
33
255
178
62
14
97
341
157
410
0
200
400
600
800
1,000
1,200
Collateral Requirement Available Collateral
GBPMillions
1 Year VaR of Swaps 1 Year VaR of Gilts 1 Year VaR of Equity Future+TRS Initial Margin of Equity Future
Conventional Gilts Index Linked Gilts+Asset Swaps+Repo Cash Swap MtM
Collateral analysis monitors whether the Scheme has sufficient collateral to meet derivative calls over the next year on a minimum worst-case basis

34. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013
13-15 Mallow Street London EC1Y 8RD Telephone : +44 (0) 20 7250 3331 www.redington.co.uk
Contacts
Robert Gardner
Founder and Co-CEO
Direct Line: 0207 250 3416
robert.gardner@redington.co.uk
LinkedIn: http://linkd.in/134mv6H
Twitter: https://twitter.com/robertjgardner
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Steven Yang Yu
Director and Co-Head of ALM
Direct Line: 0203 326 7118
Steven.yangyu@redington.co.uk
LinkedIn: http://linkd.in/11fvC1S
Teresa Ngone
Investment Consultant
Direct Line: 0203 326 7132
teresa.ngone@redington.co.uk
Linkedin: http://linkd.in/ZqUaIs
Twitter: https://twitter.com/

35. Private & Confidential BNY Mellon iRIS Teach-In 05 June 2013
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