Dimensional Retirement—Managed DC A Managed Risk Solution for ...

Dimensional Retirement—Managed DC A Managed Risk Solution for ...

Managing Defined Contribution Investments for Retirement Income Meeting Data/Data as of November 15, 2011 Dimensional Retirement (an affiliate of Dimensional Fund Advisors LP) is an investment advisor registered with the Securities and Exchange Commission. Dimensional Managed DC is available through Dimensional Retirement. Participant Research Shows That There Is a Need for New, Professionally-Managed Income Solutions A majority of participants would rather use a professional investment expert when it comes to money management and investing in a DB-like option. Level of Agreement Investment Management 55% Prefer that a professional investment expert make decisions about how to invest money in the plan 28%

25% Spending Management 51% Prefer to put retirement nest egg in account that manages how much is spent each year to ensure participant doesnt run out of money 29% 20% Disagree Neutral Dimensional/Boston Research Group study of 1,000 plan participants in January 2011. #19161 Strongly agree

2 Participants Also Desire More Certainty in Terms of Their Expected Benefits Participant Response When Asked to Choose Wealth maximization at the risk of not having enough money for a minimum acceptable lifestyle at retirement 20% 80% Wealth outcomes in a range between mum acceptable to a comfortable lifestyle at retirement Dimensional/Boston Research Group study of 1,000 plan participants in January 2011.

#19161 3 Retirement Confidence Findings Retirement Confidence Ratings Know how much money is need to accumulate in order to live desired lifestyle in retirement 12% 88% 18% On track to have enough money in retirement to live desired lifestyle 82%

Somewhat to not very confident Dimensional/Boston Research Group study of 1,000 plan participants in January 2011. #19161 Very confident 4 QDIA Income Solutions Must Be Designed Around a Goal Goal To give every participant the best possible chance of having a successful retirement. 5

#19161 A Solution Must Consider Each Employees Essential and Desired Income What they need at retirement: Essential Less than this income will not allow them to retire successfully. What they desire at retirement: Desired More than this income is attractive only if it is risk free. 6 #19161 Appropriately Structured Investment Strategies Can Narrow the Distribution of Participant Outcomes Essential Desired

Dimensional Managed DC 7 #19161 Participants Need to Understand the Relevant Tradeoffs Participant Action Probability of Achieving Desired Retirement Income Goes Up Goes Down Raise Desired Income Target Raise Essential Income Target

Contribute More Work Longer 8 #19161 Retirement Income Options Effectiveness of Hedging Options Longevity Risk

Inflation Risk Investment Interest Rate Risk Risk Income Nominal Immediate Income Annuity Immediate Income Annuity with CPI rider Variable Annuity with guaranteed income floors Longevity Insurance Laddered TIPS Strategy IRA with 60/40 allocation Control

9 #19161 Disclaimer The underlying investments in Dimensional Managed DC are subject to market risks and may fluctuate in value over time. There is no guarantee of achieving the target income payout during retirement. Income from retirement payout contract depends on the claims-paying ability and strength of the issuing insurance company. Dimensional Retirement (an affiliate of Dimensional Fund Advisors LP) is an investment advisor registered with the Securities and Exchange Commission. Dimensional Managed DC is available through Dimensional Retirement. Investing entails risks, including possible loss of principal. No assurances or guarantees are given regarding the performance of any investment. 10 #19161

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