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Here’s toPENSIONSTHE NEWSLETTER FOR MEMBERS OF THESCOTTISH & NEWCASTLE PENSION PLANSPRING 2022

CHAIRMAN’SWELCOMEWelcome to the spring 2022newsletter for members of theScottish & Newcastle Pension Plan,which includes a number of articlesthat I hope will be of interest to you.The Trustee is required to carryout a full actuarial valuation atleast every three years. The mostrecent valuation, carried out as at31 October 2021, showed that thePlan had a small deficit of 36m.This represents a major improvementfrom the previous valuation.The valuation results can be foundon pages 4-6.As usual in the spring issue, weprovide a summary of the Plan’sincome, expenditure and membershipfigures. This report is as at2 Here’s to Pensions - Spring 202231 October 2021. These can be foundon page 7.The Trustee’s priority will always beto ensure that benefits are paid in fulland on time, not just today but intothe future. We are continually lookingfor better ways to work efficiently andeffectively as a Trustee board and wehave reviewed the way our Trusteesub-committees work; these play animportant role in helping us managethe Plan. You can read more aboutthese changes on the Plan website,under ‘About the Plan’.Last year I announced that JillAdamson had been appointedby a Selection Panel to replaceAndy Ackermann on the Boardfollowing the end of his service.

You can find out more about Jill onpage 11. I’m also sorry to announcethat two of our Trustee Directors haverecently left. Dee Mair, an independentTrustee Director, has stepped downhaving completed her full nine-yearterm of office and Naomi Harding,who has been a Company-appointedDirector for the past five years, hasrecently left HEINEKEN. Both playeda key role in updating the Plan’smember communications throughtheir participation in the MemberRelations Committee (MRC).Max Graesser has been appointedas Dee’s replacement and JohnHutchison has replaced Naomi as aCompany Appointed Director. We willintroduce both of the new TrusteeDirectors to you in future editions ofthis newsletter. I extend my thanks toboth Dee and Naomi for their valuablecontributions to the Trustee.The Trustee is, of course, closelymonitoring the dreadful situationin Ukraine. Our thoughts are withthose whose lives have been affected.Our duty as Trustee is to focus onwhat this means for the security ofmember benefits – looking at theimpact on member data and thePlan’s investments (see page 10).More generally, the importance of thePlan’s investments on the world aroundus is rising rapidly up the pensionsagenda because of a mix of changinglaw, regulatory guidance, and growingdemand from pension savers and otherstakeholders. The Trustee has beenconsidering how environmental, socialand governance factors might affectthe Plan, and I expect to return to thistopic in more detail in future editions ofHere’s to Pensions.INSIDE THISISSUEValuation update4On the money7Who’s in the Plan?8Investments9Running the Plan11Members’ corner12Pensions news14Contact us16Jane ScrivenChair of Trustee BoardHere’s to Pensions - Spring 2022 3

VALUATION UPDATEEvery three years the actuary, an adviser to the Trustee, looksclosely at the finances of the Plan. This is called a valuation.The most recent valuation for the Scottish & Newcastle Pension Plan tookplace as at 31 October 2021. You can find the results on page 5.In a valuation, the actuary compares the estimated cost of providing thebenefits that have built up in the Plan (the ‘liabilities’) with the amount ofmoney held by the Plan (its ‘assets’). If the Plan has fewer assets thanliabilities, it is said to have a ‘shortfall’. If the assets are more than theliabilities, it is said to have a ‘surplus’.While it’s relatively easy to work out the assets, the actuary has to make anumber of assumptions in order to calculate how much the Plan will need inthe future to pay all the benefits promised to members – for example, howmuch the investments will grow by, inflation rates and how long members willlive. The Trustee and HEINEKEN also need to agree with the actuary’sassumptions. This is known as the funding basis.Trustees are required to consider funding, investment strategy and covenantassessment as an integrated whole, recognising that the funding of pensionschemes is a long-term process. This ensures that trustees have taken allrelevant aspects into account when agreeing their funding plan with employers.4 Here’s to Pensions - Spring 2022

WHAT DID THE 2021 VALUATION SHOW? 2021: 3,692,000 per month2021 valuation2018 valuation99%91%Assets 3,560m 3,003mLiabilities 3,596m 3,285m 36m 282mFunding levelShortfallThe improvement in the funding level was largely due tothe investment return on the Plan’s assets being higherthan assumed, and the contributions paid by HEINEKEN toremove the shortfall.CORRECTING THE SHORTFALLAs you may remember from the 2018 valuation, theTrustee and HEINEKEN signed a long-term fundingagreement that sets out the funding basis and investmentassumptions to be used until 2030. Under the fundingagreement, the deficit contributions payable byHEINEKEN are payable regardless of the results ofthe 2021 valuation: 2022: 3,833,000 per month 2023 (until 31 May): 3,975,000 per monthThe funding agreement allows for a gradual reduction inthe amount of investment risk.As a result of good asset performance and an overallimprovement in the funding position, the Trustee and theCompany agreed to bring forward the de-risking stepplanned for 2024 to the end of 2021. This means that thesecurity of members’ benefits has been improved morequickly than expected, and accelerates progress towardsthe ultimate objective of self-sufficiency (i.e. no relianceon financial support from the Company). We will continueto monitor the position and look for further opportunitiesas they arise.WHEN IS THE NEXT VALUATION?The next valuation is scheduled to take place as at31 October 2024. However, the actuary also carries outless detailed but more regular ‘annual check-ups’on the Plan. The next review will look at the position asat 31 October 2022, and we will share these resultswith you in the Spring 2023 Here’s to Pensions.Here’s to Pensions - Spring 2022 5

VALUATION UPDATE CONTINUEDWHAT HAPPENS IF THE PLAN CLOSES?PENSION PROTECTION FUNDAs part of the valuation, the actuary also looks at thefunding level if the Plan was wound up (that is, the Planwas closed and the Trust ended). HEINEKEN hasconfirmed that it currently has no intention of winding upthe Plan; we are just giving this information to help youunderstand the security of your benefits.The Pension Protection Fund (PPF) was set up in 2005 tocompensate members of eligible UK pension schemeswhich are wound up when the employer is insolvent andthe scheme does not have enough assets to covermembers’ benefits. All eligible pension schemes arerequired to contribute to the PPF by paying a levy eachyear. HEINEKEN has agreed to pay this levy for the Plan.Further information is available at: www.ppf.co.ukIf the Plan had wound up as at 31 October 2021 (the dateof the last full valuation), the actuary estimated that theTrustee would have had to pay an insurance company 4,585 million to provide all the benefits in full. This wouldhave left the Plan with a shortfall of around 1,025 million,and a funding level of 78%. The funding level on windingup is therefore estimated to have improved since the 2018valuation, when it stood at 70%.The Trustee aims to have enough money to pay pensionsand other benefits to members as they fall due, ratherthan having to pay an insurance company to provide thebenefits, which can be very expensive.6 Here’s to Pensions - Spring 2022WHAT IS THE ROLE OF THE PENSIONSREGULATOR?The Pensions Regulator has the power to intervene in thefunding of a pension scheme. The Plan has not beenmodified by the Regulator, is not subject to any directionsfrom the Regulator and it is not bound by a schedule ofcontributions imposed by the Regulator.HAVE ANY PAYMENTS BEEN MADETO HEINEKEN?No. We can confirm there have been no payments made toHEINEKEN from the Plan over the last 12 months.

ON THE MONEYThe 2020/21 financial accounts of the Scottish & Newcastle Pension Plan are summarised here. The Plan’s independentauditors, RSM (who replaced Ernst & Young in November 2021 following a review by the Trustee), have confirmed that theaccounts give a true and fair reflection of the Plan’s financial transactions during the year. You can view the full AnnualReport & Accounts on the Plan website, www.snpensions.com.THE BOTTOM LINEOn 1 November 2020 the Plan was worth 3,212.7mPLUSnet change in the marketvalue of the investments 299.7mPLUSpayments in 103.4mLESSpayments out 169.7mOn 31 October 2021 the Plan was worth 3,446.1m*CHANGE IN PLAN VALUEPayments inEmployer contributions46,620Investment income56,792Total2020 3,213m2019 3,215m103,412Payments out ’000Pensions121,626Cash paid when members retire or die16,887Benefits for leavers18,293Professional and administrative fees12,854Total2021 3,446m ’000169,660* The asset value above differs from the value on page 5 as the treatment ofcertain assets in the accounts is different to that under the Plan valuation.Here’s to Pensions - Spring 2022 7

WHO’S IN THE PLAN?At 31 October 2021 there were just under 33,500 members in thePlan, with overall numbers reducing by 831 over the year.20218 Here’s to Pensions - Spring 20222020Pensioners18,931Pensioners18,914Deferred members14,561Deferred members15,409Total33,492Total34,323

INVESTMENTSThe Trustee sets the investment strategy for thePlan, in consultation with its advisers, takinginto account considerations such as the strengthof the employer covenant, the long-termliabilities of the Plan and the funding agreedwith HEINEKEN.The investment strategy is set out in a document calledthe Statement of Investment Principles (SIP), whichis available to download from the Plan website,www.snpensions.com. It’s a public website so there’s noneed to register or sign in to view the document.During the year, the Trustee updated the SIP to reflect anew strategic investment allocation aimed at furtherreducing risk. For example, the allocation to corporatebonds (lower but more stable returns) was increased from12.5% to 26.5%, while the allocation to equities (higherreturns but higher risk) was reduced from 20% to 6%.This de-risking was carried out ahead of schedule as aresult of the funding level being ahead of target.Here’s to Pensions - Spring 2022 9

INVESTMENTS CONTINUEDBENCHMARK ASSET ALLOCATIONINVESTMENT PERFORMANCEThe new benchmark asset allocation is shown in thechart below:The Trustee sets a long-term performance target for the Plan,which is currently to outperform the growth in the Plan’sliabilities by 2.45%. The Plan’s performance against thistarget (called the ‘benchmark’) is set out in the table below.Total Plan returnBenchmarkOne year (%)Three years (% p.a.)7.38.4(0.4)6.5THE IMPACT OF THE WAR IN UKRAINELiability Driven Investments(which seek returns similar to our liabilities)Corporate BondsEquities (including currency hedging)30%26.5%6%Higher Yielding Credit15%Private Markets15%Long Lease Property7.5%10 Here’s to Pensions - Spring 2022The immediate effect of the invasion on investmentshas been volatility in global financial markets.The Plan’s investment strategy means that thereis no direct exposure to Russian investments and,therefore, the impact on the crisis on the assetshas been minimal.