PG&E Cash Balance - IBEW Local 1245

INFORMATION ON PG&E’s PROPOSED OFFER OF A CASH BALANCE PENSION PLAN FOR NEW HIRES AFTER 2013 Background on Cash Balance Pension Plans COMPANIES WHO HAVE CONVERTED TO CASH BALANCE PLANS 1998: San Diego Gas and Electric 1999: Southern California Edison 2010: NV Energy DRIVING FACTORS: Pension regulations Volatility in stock market Regulatory/public pressure Cash Balance Plan Design Annual contribution of negotiated percentage of wage + Negotiated interest + Increased 401(k) = Fixed amount at retirement with choice of: Lump sum pay out Convert to a lifetime annuity 1 PG&E Plan Design for New Hires After 2013 5-9% of Straight Time Pay (See Plan Formulas below) + 30-year Treasury bond rate interest +

401(k) 75% up to 8% Automatic enrollment with opt-out = Lump sum or convert to a lifetime annuity Comparisons with Local Utilities Cash 401(k) Total Balance San 7.5% 50% to 10.5% Diego 6% Edison 3% 100% to 9% 9% 6% 15% NVE 4% 100% to 10% 6% PG&E 5% 75% to 11% Proposed 9% 8% 15% Comparison with Existing Pension Includes all components of retirement income: pension, 401(k), and social security Before age 52: cash balance account provides higher income replacement Position Age Comparison Electric Crew Foreman 55 81% 62 93% 65 97% Customer Service Rep 55 81% 62 91% 65 96% 2 Pension • Monthly paid pension based on • Cash balance account of accumulated Plan pay and service at retirement annual pay credits plus interest Formula • 1.5% final pay X service up to Annual Pay Credits based on Age and Service: 25 years, plus • Less than 40 points 5.00% • 1.6% final pay x 25+ years of • 40-49 points 6.00% service • 50-59 points 7.00% • 60-69 points 8.00% • 70 or more points 9.00% Annual interest based on 30-Year Treasury rates • 5-year vesting • 3-year vesting • Not portable if you leave PG&E • Portable—you can take your benefit with you before retirement; pension if you leave PG&E before retirement payments can begin at age 55 or later • Early retirement benefit • Full account balance payable when you retire reductions may apply or leave PG&E—regardless of age • Monthly annuity for life • Choice of monthly annuity for life or lump- sum distribution 401(k) • $0.60 per $1 up to 3% of pay • $0.75 per $1 up to 8% of pay after Match for completing 1-3 years of service 1 year of service • $0.60 per $1 up to 6% of pay for 3+ years of service Issues for Consideration Value to employee of lump sum option Regulatory pressure on pension costs RSP is a greater component, so greater risk is transferred to employee Two-tier / two platforms No changes to current program of pension and 401(k) Retirement Savings Plan (RSP) for current employees New retirement program for new employees hired January 1, 2013, or later Higher 401(k) company matching contribution Automatic enrollment in 401(k) at the full company match level Current employees can opt in to the new program, effective 2014...

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