Capgemini UK Pension Plan - capgeminipensions.com

1 Capgemini UK Pension Plan Annual Update Defined Benefit Sections Welcome to the Capgemini UK Pension Plan Annual Update for the year ending 31 March 2016. This Update is designed to keep you informed of the Plan's development over the past year and is intended for members of the In Service Deferred Sections of the Plan (formerly Defined Benefit, Ernst & Young Category 1 and Ernst & Young Category 2). Chairman's Review - Plan Year ending 31 March 2016. The year began with a change in structure for the Plan. As announced in the 2015 Plan Update, following a period of consultation during 2014, the Company made the decision to close the remaining defined benefit (DB) sections to future accrual on 31 March 2015. All DB Section members of the Plan have now ceased accrual of future service. The Plan year also saw the introduction of significant changes to pensions legislation.

2 The Freedom and Choice legislation, which came into effect in April 2015, introduced the flexibility for members of company Pension arrangements like ours to draw their defined contribution benefits in almost any form. The Trustees reviewed the new options available and how these would interact with Plan benefits. As a result, a number of changes have been made to the Plan structure giving increased flexibility for members with defined contribution benefits in the Defined Contribution Section and/or through Additional Voluntary Contributions - these changes were communicated to all members in April 2015 and were included in the 2015 Plan Update. The Plan Actuary carried out the triennial valuation at 1 April 2015 to assess the Plan's funding position. The Valuation certificates were signed on 28 June 2016.

3 Further details are included later in this Update and in the annual Summary Funding Statement which has been sent to you separately. The year also saw some changes to the Plan's management team. In May 2015 we sought nominations for the positions of Member Nominated Trustees, and I am pleased to announce that Alan Murphy and Hugh Tinsley were both reappointed to their roles. In February 2016, Ken Hillebrandt stood down from the Trustee board, and was replaced by Norman Buckingham, who is also Head of Pensions for Capgemini UK and Secretary to the Trustees. Towards the end of the Plan year, we began to consider actions that may be required following the outcome of the UK. Referendum on membership of the EU (Brexit). Since the end of the Plan year, markets have been both volatile and uncertain, and we have been reviewing the impact on the Plan of the vote to leave the EU.

4 As always, our priority remains to protect the interests of our members, and we will continue to work with our advisers to react appropriately to changes in market conditions. This will be an ongoing process as the future landscape of UK pensions develops. As we begin the 2017 Plan year, which we expect to be as challenging and as eventful as the last, I wish to thank my fellow Trustees for all their hard work over the past 12 months. Tony Fisher Chairman of Trustees The Plan year in brief Advisers to the Trustees The Plan's DB Assets decreased from 1, to The Trustees are assisted in the running of the Plan by a 1, number of professional advisers as follows: The Plan's total defined benefit membership decreased from 9,522 to 9,448. Plan Actuary : Mr Robert Birmingham FIA. Overall the Plan's portfolio achieved a return of (Xafinity Consulting).

5 Over the 12 months in challenging market conditions, Plan Administrators : Xafinity Consulting and an average return of per annum over the Plan Investment Consultants : Xafinity Consulting three year period. Plan Auditors : PricewaterhouseCoopers LLP (PwC). New retirement options were introduced from April 2015 Plan Lawyers : Travers Smith LLP. under Freedom and Choice'. Fiduciary Manager : Kempen Fiduciary Management The April 2015 valuation was completed, and a new (formerly known as MN). Recovery Plan was put into place from July 2016. Alan Murphy and Hugh Tinsley were reappointed DB Section Investment Managers as MNTs, and Norman Buckingham replaced Ken M & G Investment Management Limited Hillebrandt as a Company Appointed Trustee. Bridgewater Associates LP & Bridgewater Associates Inc Majedie Asset Management Limited Plan Management Baillie Gifford & Co Limited The Plan is managed by a board of Trustees, with the Blackrock (Channel Islands) Limited support of the Capgemini Pensions Team in Woking and Standard Life Investments (Mutual) Limited a number of professional advisers.

6 Contact details for the Ruffer LLP. Plan administrators are at the end of this update. Insight Investment Management (Global) Limited MN Services Fondsenbeheer Trustees Brevan Howard Capital Management LP. The current Trustees of the Plan are: Babson Capital Europe Limited Tony Fisher (Chairman) BlueMountain Capital Management Tony Winslade Canyon Capital Advisors LLC. Peter Birch Bridgewater Associates, LP. Norman Buckingham (appointed February 2016) Shaw and Co, LLC. Hugh Tinsley (MNT) (reappointed May 2015) Capital Fund Management Alan Murphy (MNT) (reappointed May 2015) BlueCrest Capital Management LLP. Lynx Asset Management AB. Norman Buckingham is also the Secretary to the Trustees Pharo Gaia (appointed 27 January 2016). and the Head of Pensions for Capgemini UK. He is supported Heliant by Brenda Thomas, Assistant Pensions Manager, and Sue Stratus Richardson, Pensions and Benefits Officer.

7 One William Street Legal and General Clerical Medical Investment Group Limited*. Equitable Life Assurance Society*. *AVCs only 2 Capgemini UK Pension Plan - Annual Update Defined Benefit Sections Trustees' Annual Report and Accounts This year saw the introduction of a new accounting standard, which required significant change in the information included in the Trustees' annual report and accounts, in particular relating to how the risks of the different investment classes are disclosed. The Plan's accounts were audited by the Plan auditors and were signed in October 2016. Financial Development A summary of the key financial information for the DB Section is set out in the table below: Summary of Accounts 2015/2016 2014/2015. ( '000) ( '000). Fund Value at Start of Year 1,695,787 1,373,615. Money Paid into the Plan Contributions 26,244 27,629.

8 Transfers In and Other Income (including transfers between Sections) 3,868 2,679. Net Investment Return 6,711 334,245. Money paid out of the Plan Pensioner and Leaver benefits (56,380)* (42,381). Fund Value at End of year 1,676,230 1,695,787. *The leaver benefits were higher than usual due to an increase in the number of transfers out, and a bulk transfer out in relation to a group of members formerly employed by Xansa. Membership of the Defined Benefit sections The table below summarises the membership of the DB section at the year end. Membership 2016 2015. Active members 1,220* 1,389*. Deferred Members 5,916 6,033. Pensioners 2,312 2,100. Total 9,448 9,522. *Active members are In Service Deferred members still working for Capgemini Actuarial Valuation at 1 April 2015. As a part of running the Plan, the Trustees are required to carry out an actuarial valuation at least once every three years.

9 This health check' reviews the Plan's assets and liabilities to ensure that it is able to pay benefits to members as and when they become due. If the value of the assets is less than the liabilities, there is said to be a deficit. If the value of the assets is greater than the liabilities, there is said to be a surplus. The valuation is used to determine the funding position of the Plan and to provide a basis for the Trustees and the Company to agree the level of contributions to be paid into the Plan, including a Recovery Plan' to eliminate any deficit. The most recent triennial actuarial valuation of the Plan was carried out as at 1 April 2015 and was signed by the Trustees and Plan Actuary on 28 June 2016. A summary of the funding position at the valuation date is set out below: 1 April 2015. Market value of assets 1, Value of liabilities 2, Deficit ( ).

10 Funding level 74%. 3 Capgemini UK Pension Plan - Annual Update Defined Benefit Sections A number of factors impacted the deficit at 1 April 2015. Investment Strategy As a part of the valuation process, the Trustees agreed an The general strategy of all defined benefit Pension improvement in cash commutation factors and the use arrangements is to ensure that there are sufficient funds of a more prudent method of valuing the liabilities - these to meet the benefits due from the Plan on an ongoing changes had an unfavourable effect on the deficit. Similarly, basis. However, this is no longer simply a case of making market conditions, in particular falling yields on fixed interest sure that investments are achieving the highest possible investments such as corporate bonds and Government gilt- return. Market environments are volatile - instability in the edged securities ( gilts'), also had an unfavourable impact.