Presentation on theme: "US Salary Investment Plan (SIP)"— Presentation transcript:
1 US Salary Investment Plan (SIP) The Reed ElsevierUS Salary Investment Plan (SIP)Now, let’s turn to SIPToday’s main agenda points are as follows:Discuss the provisions of SIPDiscuss the changes to SIP for 2002Discuss the basics of investing and the SIP fund line up, including the brokerage account and advise accountdevelop a strategy for participating in SIP
2 * HCEs are limited to 10% before tax; 2% after tax SIP Plan HighlightsEligible after 3 monthsBefore-Tax and After-Tax SavingsMaximum contribution 20%*50% Company Match on the first 6% of Before-Tax and After-Tax Contributions taken from your pay.One year vesting on company matching contributionsEligible employees will be automatically enrolled in plan at a 2% Before-tax contribution rate which will be invested in the YES fund.Loans/Withdrawals (3 loans available)Here are some of the features of our SIP plan as of right now.First, you are eligible for the plan after 3 months of service.The plan allows both before-tax and after-tax contributions. After-tax contributions allow you to continue to contribute to the plan, even if you reach the before-tax limit on contributions. After-tax contributions allow you more flexibility in terms of access to your funds and your investment results grow tax-free until distribution.The maximum contribution you can make is a total of 20% of pay – that’s either before-tax, after-tax or on a combined basis. Highly compensated employees, those who earn more than $85,000 this year, are limited to a before-tax contribution rate of 10% and after-tax rate of 2% in This is an increase from the current 8% before-tax and 2% after-tax limits for HCEs.. We’ll let you know in late January if this applies to you.SIP’s company match is a 50% match on the first 6% of pay you contribute.You are vested in your company contributions made to the plan after one year of service.If you do not enroll in the plan on your own or actively waive participation, you will be automatically enrolled in SIP at a before-tax contribution rate of 2%. Your contribution will be invested in the YES fund, the plan’s most conservative investment option. This automatic enrollment is meant to get you into the plan so you can see how great the plan can be.SIP allows up to 3 loans at a time under the plan. You can also access your plan assets with an in-service withdrawal or a hardship withdrawal. We want you to feel comfortable saving.* HCEs are limited to 10% before tax; 2% after tax
3 Investment Allocations Invest in 13 SIP Core Funds, 3 Core Asset Allocation Funds, the Advice Account and a Self-Managed Brokerage AccountInvest in 1% increments (for a total of 100%)Change investment increments at any time by calling the Reed Elsevier Information Line:SIP has 22 funds in total, including 13 Core funds, 3 asset allocation (“one stop shopping” kinds of funds), 5 Advice funds and a self managed brokerage account. These funds will be discussed further in the presentation.You can select to have your contributions invested into any of these funds (except the Self Managed Account) in 1% increments.( )or through the web site at:
4 Automated Phone System and Internet Website Access daily information on accountsTransfer money among funds; change contribution percentages and investment electionsInitiate and model a loan or distributionReview fund performanceReview interactive calculatorsUse the educational resource centerSpeak to a Participant Services Representative (Mon – Fri 9 – 5 ET)The automated phone system is available virtually 24/7.You can use the phone system to access your account or perform many transactions.Participant Services Representatives are available to answer your questions and take requests Monday through Friday from 9:00 – 5:00 ET.You can choose whether you want your account to be accessible via the internet. If so, it is available virtually 24/7. You can review your account, model or request a loan, learn about the investment funds and request a transaction. You will receive a confirmation of your transaction, to be mailed 2 – 3 days later.Phone:(new address)
5 SIP Website http://resip.csplans.com This is the SIP website. You can use this site to access your account, perform transactions and get information about SIP. You will need your SIP PIN to access this site. If you do not have your PIN, you may contact the Reed Elsevier Information Line.
6 SIP QUIZ!Which of the following could be considered 401(k) investment mistakes?a) Failure to contribute enough to receive the maximum matchb) Borrowing from your 401(k)c)Trying to time the marketd) all of the aboved) all of the aboveAn employer’s company match is free money. It provides an immediate and totally risk-free, tax deferred return on your savings.There are some emergency situations where borrowing from the plan may be appropriate. However, such loans will only serve to reduce the balance that would have been available in the plan at retirement had the loan not been taken.Even the pros can’t time the market with any consistent degree of success. Long term investor should be consistent and stick with an appropriate investment allocation.Still better to save and take a loan than not to save at all.
7 EGTRRA Related Changes The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) is great news for 401(k) plans since it allows for more flexibility in SIP.Effective January 1, 2002, here are some of the EGTRRA related changes to SIP:The before-tax contribution limit will increase to $11,000 per year.If you are age 50 or older by the calendar year end, you may defer additional savings ($1,000 for 2002)Annual compensation recognized under SIP will increase to $200,000 in 2002The new tax bill changes recently passed by congress are great news for 401k plans since some of the rules governing these plans have been liberalized. There are other aspects of the tax bill that we will not cover today since they do not relate to 401(k) plans.We reviewed the details of EGTRRA to determine which of its features will have the most positive impact on SIP. We’d like to review the plan design changes related to EGTRRA. Most of these changes are effective 1/1/02.The limit on what you can contribute to SIP on a before-tax basis is up to $11,000 (from $10,500) in The limit will go up by an additional $1,000 for each of the next 4 years, which means that by 2006, you’ll be able to save up to $15,000 of pay in SIP on a before-tax basis.We are now able to offer employees 50 years and older the chance to catch up on before-tax contributions. You can contribute an additional amount on a before-tax basis beyond SIP or IRS limits. For 2002, the catch up contribution limit is $1,000 but increases each year until it is $5,000 in Although these catch up contributions will not receive company match, they give employees nearing retirement a chance to catch up on their retirement savings. This feature will be available in the plan in the Spring of Further information will be available at that time.Under current IRS laws, no more than $170,000 in annual compensation is taken into account in determining your contributions to SIP. The $170,000 cap will increase to $200,000 for 2002 and will continue to increase in subsequent years.
8 EGTRRA Related Changes When you file your federal tax return, you may be able to take a tax credit for a portion of the SIP contributions you make to the plan.Hardship withdrawals taken after January 1, 2002 will result in a 6 month suspension from contributions, down from a 1 year suspension.More restrictive loan regulations for loans taken after January 1, 2002.The company match is an incentive to contribute to SIP. In addition, the IRS has added an additional tax credit of up to a maximum $1,000 per year. Employees with an adjusted gross income of $50,000 or less for married filing joint, AGI of $37,500 or less for head of household or AGI of $25,000 or less for single filers may be eligible for this tax credit. Please consult with a tax advisor to see if you are entitled to this tax credit beginning in 2002.The contribution suspension for employees who take a hardship withdrawal will decrease from 1 year to 6 months. This change takes effect with any hardship taken after 1/1/02.EGTRRA requires that all 401k plans have more restrictive administrative procedures around loans and repayments to the plan. Further information about these changes are available on the SIP website.
9 Company Initiated Changes Automatic True up of matching Company Contributions – the Company will deposit any missed Company-matching contributions due to IRS limits on contributionsIf you are taking your PIP benefit as an annuity, you can roll over your SIP distribution to PIP, where it will be combined with your PIP annuityIn addition to the tax bill changes, we are adding a few changes of our own.A new feature we are adding to SIP in 2002 is what we call a “true up” of matching contributions. If you elect a contribution rate of at least 6% of pay and you reach the IRS before-tax limit before the end of the year, your payroll deductions will stop. Your matching contributions will stop too so that you may not be getting all you should get. We’ve added the true up match so that if you are an active employee at the end of the year, we will true up the match by depositing any matching contributions you may have missed. This money will go into your account early the next year. With the true- up, you are sure to get the full 50% of the first 6% of pay you save in the plan.Some people don’t like getting paid out in a lump sum. Some people prefer an annuity. So now, at retirement date, you will be able to request a distribution of your before- tax money from SIP and roll it into PIP. This money will be combined with your PIP account so that you can receive a combined annuity from PIP.
10 Preserve Your Investments With Cash Equivalents Savings vehicle that typically earns a fixed interest rate:Money market fundsTreasury billsSavings accountCommercial papersCertificates of deposit (CD)What’s the biggest risk?Inflation riskCITISTREET PRESENTERWhen we think of cash as an investment, we are not talking about the paper or coin currency that we have in our pockets. Cash equivalents are what we consider a savings vehicle. This savings vehicle has the following characteristics:* Safety of principle* Fixed interest rate* Short-term* High liquidity
11 Generate Income With Bonds Loan agreement between an investor and issuer in which the issuer repays the principal plus interest:Government bondsCorporate bondsMunicipal bondsInternational bondsWhat are the biggest risks?Interest rate risk and credit riskCITISTREET PRESENTERLet’s move to a discussion about bonds, probably one of the more misunderstood asset classes.Bonds are considered I.O.U.’s. As an investor, you are lending your money to another organization and receive interest income until your principal is returned to you. The bond will have a coupon rate for the interest, a face value, for what it is worth at par and a maturity date for when the loan will be paid back.
12 Grow Your Investment With Stocks Represents ownership in a company:Large company stocksMid-sized company stocksSmall company stocksInternational stocksWhat’s the biggest risk?Market riskCITISTREET PRESENTERLet’s turn our attention now to stocks.The main objective of stocks is growth for the investor. Stocks represent ownership in a company. As an investor in stocks, you benefit on how well the company does in the stock market. If the company excels (it’s sales increase, market share goes up, etc.), the stock price may go up, therefore creating positive returns on your investment. Conversely, if the company does not fare well, or the overall market drops, then you may face a loss of principle. This variability is what is called market risk.There are different categories of stocks. We can view them by their size and location. Large companies in the United States are often more stable than small domestic companies. U.S. stocks tend to be more stable than international stocks.
13 Best Performing Equity Markets in the Past 10 Years 2000 Denmark1999 Finland1998 Finland1997 Italy1996 Spain1995 Switzerland1994 FinlandHong KongCITISTREET PRESENTERWhen looking outside the United States for investments, there are additional risks to be considered such as currency risk and political risk. Returns may also increase due to this added risk. To look at this relationship, let’s look at the best performing developed markets over the past 10 years.Amazingly enough, we will not see the U.S. flag on this slide. This demonstrates that there are opportunities for growth outside of the United States.* In U.S. Dollars
15 Types of Strategies V E R S U S Passive / Index Investing Attempts to mirror a broad-based indexGenerally low transaction and management costsV E R S U SCITISTREET PRESENTERThere are two types of investment strategies in investment funds; Passive and Active.Passive investing tries to mirror a specific index. The manager of the fund will invest in the same securities as the index. The costs associated with this type of investing are typically lower than actively managed funds.Actively managed funds are trying to beat a specific index. The manager is “actively” researching different investments to determine which will outperform their peers on a regular basis. Due to higher trading and research costs, these funds typically have higher fees.Active InvestingManagers actively pick securitiesAttempts to outperform an index / benchmarkUsually subject to higher investment management fees
16 Passive Investing INDICES An indicator of market performance 91- day T- bills Money loaned for the short-term (91 days)Lehman Brothers Aggregate Bond Index (LBAG) 5,000 high quality bondsDow Jones Industrial Average (DJIA) 30 ‘bluechip’ stocksCITISTREET PRESENTERThere are many different indices, based on the different building blocks we discussed earlier: Cash, Bonds, and Stocks. Here are a few examples of indices which a passively managed fund may try to mirror.One cash index is the 91-day T-Bill.A bond index is the LBAG.One of the most highly cited stock indexes is the Dow Jones IndustrialAverage which you probably recognize from the evening news. TheDow is an average of 30 large company stocks in the United Statessuch as GE and IBM.
17 Passive Investing INDICES An indicator of market performance S&P 500 Index 500 large U.S. companiesRussell 2000 Index 2,000 small U.S. companiesMorgan Stanley Capital International -Europe, Australia, Far East (MSCI-EAFE) 1,000 international companiesCITISTREET PRESENTERAnother index for U.S. stocks is the S&P This is a weighted average of 500 large companies in the United States, such as Microsoft and State Street. This index also consists of the 30 companies in the Dow.The Russell 2000 Index is an index of U.S. small companies. If you were to take the largest 3000 companies in the U.S. and cut out the largest 1000, you would be left with the Russell 2000 Index.The MSCI-EAFE Index is an international index. It encompasses approximately 20 developed countries (Japan, Germany, U.K.) and is comprised of over 1,000 securities (Sony & Deutsche Bank).
18 Active Investing Value stock investing Uses research models in an attempt to select stocks that are currently undervalued with regard to their market price and/or earnings potential.CITISTREET PRESENTERIn Active investing, there are two approaches for investment managers to choose securities, Value and Growth.Value investing is defined by a manager looking for stocks that may be deemed as “under-priced.” For whatever reason, (litigation, restructuring, etc.) a company’s stock is out of favor with the market. With the price going down, this may be seen as a good buying opportunity. The old theory of buying low and selling high is at work here.
19 Active Investing Growth stock investing Is not as focused on the price of the stock today, but rather what the company is doing in terms of new product development, cost cutting measures, new divisions or expansion, industry leadership, etc.CITISTREET PRESENTERGrowth investing is the next type of active investing style. With this approach, the investment manager looks for securities that have a lot of growth potential. Perhaps a company has just come up with a new patent, higher revenue projections, etc. Using this style, the manager may be looking to buy high, but sell even higher in the future.Before I move on to the next agenda point, does anyone have any questions?
20 Types of Funds V E R S U S Mutual Funds Participant recognition Listed in the newspaperAvailable to the general publicV E R S U SInstitutional FundsCITISTREET PRESENTERThere are two types of investment strategies in investment funds; Passive and Active.Passive investing tries to mirror a specific index. The manager of the fund will invest in the same securities as the index. The costs associated with this type of investing are typically lower than actively managed funds.Actively managed funds are trying to beat a specific index. The manager is “actively” researching different investments to determine which will outperform their peers on a regular basis. Due to higher trading and research costs, these funds typically have higher fees.Available to institutional clientsNot listed in the newspaperTypically lower fees
21 Reed Elsevier SIP Fund Line-Up More Investment AssistanceThe Advice Account (5 Investment Funds)3 Core Asset Allocation FundsCore Investment OptionsCITISTREET PRESENTERLet’s discuss your 401(k) plan. Here is a line-up of all your investment options. Over the next few minutes we discuss each of these funds in detail. At this point in time will you please pull-out your fund fact sheets so we can review your funds.Self Managed Brokerage AccountLess Investment Assistance
22 Core Investment Options More Risk/Higher Potential ReturnReed International P.L.C. Stock FundElsevier NV Stock FundPutnam OTC & Emerging GrowthSSgA Emerging Markets FundPutnam Voyager FundJanus Worldwide FundSSgA Russell 2000 IndexDresdner RCM Large Cap Growth FundTempleton Foreign FundSSgA S&P 500 Index FundAmerican Funds Fundamental Investors FundSSgA Aggressive Asset Allocation FundSSgA Moderate Asset Allocation FundSSgA Conservative Asset Allocation FundSSgA Bond Market Index FundSSgA Yield-Enhanced Short-Term Investment Fund (YES)CITISTREET PRESENTERLet’s discuss your 401(k) plan. Here is a line-up of all your investment options. Over the next few minutes we discuss each of these funds in detail. At this point in time will you please pull-out your fund fact sheets so we can review your funds.Less Risk/Lower Potential Return
23 SSgA Yield Enhanced Short-Term Investment Fund (YES) Objective: Seeks to match or exceed returns of the Money Fund Report for money market fund mutual funds characterized as “Tier One.”Strategy: Invests in high-quality money market securities and other short-term debt instruments such as corporate and government securities.Performance (as of 12/31/01):CITISTREET PRESENTERYTD 1 Year 3 Years* 5 Years*SSgA Yield-EnhancedMoney Market Tier I
24 SSgA Bond Market Index Fund Objective: Seeks to match the returns of the Lehman Brothers Aggregate Bond Index.Strategy: Invests primarily in government, corporate, mortgage-backed and asset-backed securities.Performance (as of 12/31/01):CITISTREET PRESENTERRefer to MatrixYTD 1 Year 3 Years* 5 Years*SSgA Bond MarketIndex FundLehman BrothersAggregate Bond Index
25 SSgA Conservative Asset Allocation Fund Objective: Provide income from fixed income securities and some growth of principal from stock funds.Strategy: This fund has an asset allocation target of 75% fixed income securities, 15% large cap stock, 5% small/mid cap stock, and 5% international stock.You may want to consider this fund if:CITISTREET PRESENTERYou are comfortable with some market riskYou want stable income with controlled risk and some long term growthYou have a medium term investment time frame
26 SSgA Moderate Asset Allocation Fund Objective: Provide income from fixed income securities and growth of principal from stock funds.Strategy: This fund has an asset allocation target of 45% fixed income securities, 35% large cap stock, 10% small/mid cap stock, and 10% international stock.You may want to consider this fund if:CITISTREET PRESENTERYou are comfortable with moderate market riskYou want to achieve long-term growth and stable incomeYou have a medium to longer term investment time frame
27 SSgA Aggressive Asset Allocation Fund Objective: The fund seeks to provide growth of principal from stock funds and some income from fixed income securities.Strategy: This fund has an asset allocation target of 15% fixed income securities, 55% large cap stock, 15% small/mid cap stock, and 15% international stock.CITISTREET PRESENTERYou may want to consider this fund if:You are comfortable with more risk and greater short term changes in market valueYou want maximum growth potentialYou have a longer term investment time frame
28 American Funds Fundamental Investors Fund Objective: Seeks long-term growth of capital and income.Strategy: Invests in common stocks that appear to offer solid growth potential at reasonable prices. The fund may also invest significantly in non-U.S. securities.Performance (as of 12/31/01):CITISTREET PRESENTERYTD 1 Year 3 Years* 5 Years*American FundsFundamental InvestorsFundRussell 1000 Value Index
29 SSgA S&P 500 Index FundObjective: Seeks to match the performance of the Standard & Poor’s 500 Index.Strategy: Invests in all 500 stocks in the S&P 500 Index in proportion to their weighting in the Index.Performance (as of 12/31/01):CITISTREET PRESENTERYTD 1 Year 3 Years* 5 Years*SSgA S&PIndex FundS&P 500 Index
30 Templeton Foreign Fund Objective: Seeks long-term capital growth.Strategy: Invests primarily in stocks issued outside the U.S., including the emerging markets.Performance (as of12/31/01):CITISTREET PRESENTERYTD 1 Year 3 Years* 5 Years*Templeton Foreign FundMSCI-EAFE Index
31 Dresdner RCM Large Cap Growth Fund Objective: Seeks long-term capital appreciation.Strategy: The fund invests in equity securities of U.S. companies with at least 3 billion in market capitalization and focuses on companies that it expects to have higher than average rates of growth and strong potential for capital appreciation.Performance (as of 12/31/01):CITISTREET PRESENTERYTD 1 Year 3 Years* 5 Years*Dresdner RCM Large CapRussell 1000 Growth Index
32 SSgA Russell 2000 Index Fund Objective: Seeks to match the performance of the Russell 2000 Index.Strategy: Invests in all 2,000 stocks in the Russell 2000 Index in proportion to their weighting in the index.Performance (as of 12/31/01):YTD 1 Year 3 Years* 5 Years*SSgA RussellIndex FundRussell 2000 IndexCITISTREET PRESENTER
33 Janus Worldwide Fund Objective: The fund seeks capital appreciation. Strategy: This fund invests primarily in a mix of foreign and domestic companies, although it has generally invested a majority of its assets abroad. Stocks are selected one at a time, often with an emphasis on high-quality growth franchises believed to be trading at reasonable prices.Performance (as of 12/31/01):CITISTREET PRESENTERYTD 1 Year 3 Years* 5 Years*Janus Worldwide FundMSCI World Index
34 Putnam Voyager Fund Objective: Seeks capital appreciation. Strategy: Invest primarily in stocks of large and midsize companies across a wide range of industries, with a focus on growth stocks. The fund targets companies with sales and profits that Putnam believes are likely to grow faster than the overall economyPerformance(as of 12/31/01):CITISTREET PRESENTERYTD 1 Year 3 Years* 5 Years*Putnam Voyager FundRussell 1000 Growth
35 SSgA Emerging Markets Fund Objective: Seeks capital appreciation.Strategy: Invests in stocks issued in various countries that have developing or emerging economies.Performance (as of 12/31/01):YTD 1 Year 3 Years* 5 Years*SSgA EmergingMarkets FundIFC Investable IndexCITISTREET PRESENTER
36 Putnam OTC & Emerging Growth Fund Objective: The fund seeks capital appreciation.Strategy: Invests primarily in common stocks of small to midsize companies believed to have exceptionally strong growth potential. The portfolio may include stocks that trade over-the-counter (OTC) as well as stocks of emerging growth companies listed on securities exchangesPerformance(as of 12/31/01):CITISTREET PRESENTERYTD 1 Year 3 Years* 5 Years*Putnam OTC & EmergingGrowth FundRussell 2500 Growth
37 Reed International P.L.C. Stock Fund Objective: The Fund provides participants with an opportunity to share in the investment performance of Reed International P.L.C.Strategy: The Fund is structured to provide the greatest level of investment of participants’ contributions of Reed International P.L.C. ADR, while holding a level of short-term investments deemed appropriate by the investment manager to meet the daily liquidity requirements of the fund.CITISTREET PRESENTERPerformance (as of 12/31/01):YTD 1 Year 3 Years* 5 Years**Annualized
38 Elsevier NV Stock FundObjective: The Fund provides participants with an opportunity to share in the investment performance of Elsevier NV .Strategy: The Fund is structured to provide the greatest level of investment of participants’ contributions of Elsevier NV ADR, while holding a level of short-term investments deemed appropriate by the investment manager to meet the daily liquidity requirements of the fund.Performance (as of 12/31/01):CITISTREET PRESENTERYTD 1 Year 3 Years* 5 Years**Annualized
39 Self-Managed Account Option A brokerage account window that allows you to invest in individual stocks and bonds, as well as a wide range of mutual fundsAn alternative investment option within SIPIndividual Brokerage Account designed for the knowledgeable investorAllows a participant the opportunity to build a broader portfolio through a wide array of investment choicesThe Self-Managed Account is managed by State Street Brokerage Services Inc.CITISTREET PRESENTER
40 Is the Advice Account Right for Me? You can benefit from personalized investment advice when:You want to know how much to save for your futureYou are not sure what your 401(k) account should be invested inYou do not have time to keep tabs on your 401(k) plan investmentsYou are concerned about planning for your financial futureCITISTREET PRESENTERHighlight this for Personal Financial Plan
41 Advice Account Financial Information When you call, an Advisor will review the following information with you:Investment accounts designated for retirement401(k) plan(s) and pension plan(s)Social Security benefits available to youAn estimate from your company’s pension planAn estimate of any other retirement incomeCITISTREET PRESENTER
42 The Advice Account Goal-Oriented Approach The Advice Account Financial Advisor:Asks you a series of questions to build a personalized profile of your financial resources and retirement goalsExplains the probability of reaching your goals with your current savings and investment strategyRecommends a personalized savings and investment plan for your 401(k) to help you improve the likelihood of reaching your goalsCITISTREET PRESENTER
43 SIP QUIZ!Consider two SIP investors, Jane and John. Jane starts contributing at age 28 and socks away $2,000 a year for 7 consecutive years (a total of $14,000) . John, also 28, thinks it's silly to begin saving for retirement at age 28. He starts at age 33 and contributes $2,000 for 30 years ($60,000). Both Jane and John earn an average return of 10 % per year. Who has more at age 65?a) Janeb) Johnc) Neitherd) Who cares? How'd they get that return?a) JaneIt's never too early to begin saving for retirement, regardless of which savings vehicle you use. It's tempting to avoid saving for retirement, especially for people under 30. After all, they reason, they'll have 30 or 40 years to build a retirement nest egg. But one of the most powerful reasons to start saving early is that the earnings on your retirement funds will begin compounding sooner. Through the magic of compounding, Jane's balance has grown to $331,000; John’s is $329,000. By starting to save early, you will ultimately need to save less to have the retirement lifestyle you dream of.
44 Start Early Jane Starting now . . . John 5 years later . . . Investing $100/month 10% annual return*Dollars in thousands$226,049Jane Starting now . . .$132,683CITISTREET PRESENTERHere is a sample strategy showing their goalsJohn 5 years later . . .* Your returns may differ from the above mentioned 8%
45 Make the Most of Your 401(k) EMPLOYEE AEMPLOYEE BEMPLOYEE CSalary $25,000 $25,000 $25,000Your deferral 4% 6% 8%Company match 2% 3% 3%Twice monthly contribution $42 $63 $83Investment return 10% 10% 10%After 30 yearsCITISTREET PRESENTERHere is a possible an asset allocation strategy based upon the previous goals this person had established.$284,411$426,617$521,420
46 Add ’Em TogetherHere’s that pie chart I promised you. This chart shows where the various pieces of our sample employee’s retirement income would come from. The navy blue is the PIP pension we calculated early in the PIP presentation. Remember I said it would be an important part of her total retirement income…it’s 30%. She wisely saved in SIP to add to her income– that’s the purple. The company match in SIP is in yellow. So PIP and SIP together will make up 90% of her retirement income. Social Security will add only 10%.This is only an example. Your situation will be different. But remember we don't force you to participate in SIP; make it your business to take advantage of it.
48 Reed Elsevier U.S. Salary Investment Plan This presentation provides highlights. It does not describe many of the features, provisions, limitations, and exclusions that are contained in the documents and contracts that comprise the actual Plan. Although Reed Elsevier Inc. has made every effort to ensure that this presentation is consistent with the Plan document if there is any conflict or inconsistency between this presentation and the Plan document, the document, as construed and interpreted by Reed Elsevier, Inc., will govern.Reed Elsevier Inc. reserves the right to amend or terminate its benefit program at any time. If the benefit program is amended or terminated, you will be contacted by the Plan. Participation in the program does not create or imply an employment contract with Reed Elsevier Inc. or with any of its business units.Historical performance is not necessarily indicative of actual future performance which could differ substantially.Workshop notes
49 Important Notes Today’s workshop was designed to: Provide you with fundamental information on your 401(k)Objectively highlight your fund optionsOutline other sources of information for your decisionsThis presentation does not constitute legal, investment or financial advice of any kindPlease consult your own advisors for such adviceAny fund performance illustrated in this presentation details historic returns and does not guarantee future investment returns of the funds reviewedWorkshop notes 1998 State Street Corporation. All rights reserved.
50 Important NotesAll charts/scenarios assume the following (unless otherwise noted on slide):All rates of return are annual rates of returnSingle taxpayerTax deferred investments:Assumes reinvestment of earningsIncome taxes will be due when you withdraw from your account at the tax rate in effect at the timeTaxable investments:Pays taxes on earnings every yearWorkshop notes
51 Withdraws of pre-tax money: Important NotesWithdraws of pre-tax money:Please note that taxes would be due on any pre-tax savings and investment earnings when withdrawn at the tax rate in effect at the time. You may be subject to a 10% early withdrawal penalty if you are under age 59½.Please keep in mind that these slides present investment models only and that no two investors are alike. Relative risk will vary depending on actual portfolios and market conditions. Always consult a financial professional in determining your own risk tolerance and the allocation that best meets your personal investment needs.These illustrations are hypothetical and for demonstration purpose only, and are not necessarily indicative of the performance of any investment.Workshop notes
52 This program provides only a small taste of some of the features of the Reed Elsevier US Salary Investment Plan (SIP), and is intended to whet your appetite for more information about the plan. For more detailed information about the plan, you should sink your teeth into the Summary Plan Description of the SIP, which is available by logging onto or by calling Neither these few morsels about PIP nor the Summary Plan Description, however, takes the place of the applicable plan documents. Should any questions ever arise about eligibility or the nature and extent of your benefits from the SIP, the formal language of the plan documents as construed and interpreted by Reed Elsevier Inc. will govern. Reed Elsevier Inc. reserves the right to modify or terminate this plan at any time.