Fund Prices - Important Information

1 August 2008

Last year we identified a number of errors in the prices of some of our funds that are available through Standard Life's range of pensions and investment products. The pricing errors are linked to major system updates, including funds being moved onto a new pricing and administration platform. We are continuing to make considerable efforts to ensure these errors are corrected.

The review of all our internal funds is now complete. We are continuing to review some external fund links that are affected, and the bulk of this review will be completed by the end of August.

We have made significant progress in correcting records for everyone affected by the errors in our internal funds, with over 99.5% of affected plan records already corrected. The correction involves putting customers back to the position they should have been in, had the error not occurred. We expect to complete the work for internal funds by the end of September.

We will begin correcting records for customers impacted by errors in our external fund links in September. We expect to have a significant number of corrections completed by the end of 2008, with the remainder being corrected early in 2009.

The impact on individual customers will depend on whether the fund price that was used to buy/sell units or to calculate a fund value was too high or too low. Depending on the type of error and type of transaction, the customer could either have too many or too few units or their existing units could have been over or under-valued.

The majority of communication to those customers affected by internal funds has now been completed. The remaining customers will be written to by the end of September.

Letters have been issued to the small number of customers who have received incorrect documentation following a single premium, transfer in or fund switch, and who will have seen an increase or decrease of more than £25 at the date of correction. The letter notified them of the error and included details of their fund holdings.

We have also written to customers who had a claim settled and received a value that was too low (subject to a minimum underpayment of £10).

Policyholders affected by the internal fund errors will see the correct value in their next annual statement.

We will write to customers affected by the external fund link errors using the same criteria as used for internal fund errors upon completion of the correction process.

I will provide a further update on our progress at the end of August.

I very much regret this issue has arisen and any inconvenience we have caused. I am aware that errors with unit pricing can impact both intermediary and customer confidence. I want to reassure you that we have put in place further quality assurance controls and we are continuing to review our processes to significantly reduce the likelihood of this happening again. As always, we remain committed to providing our customers with the best possible levels of service.

If you have any questions please do not hesitate to contact us on the following telephone numbers. (Calls may be recorded/monitored to help improve customer service. Call charges may vary.)