Why did I recently receive an Annual Funding Notice regarding the Plan?

A. The Annual Funding Notice is a notice that we are required to send you to comply with a federal law known as the Pension Protection Act of 2006 (PPA). Its purpose is to give you information regarding the funding status of the Plan. The information contained in the Annual Funding Notice, and the way the information is presented, are as required by the PPA and the Department of Labor. This notice replaces the Summary Annual Report that participants received annually for Plan years prior to 2008.

How do the numbers presented in the Annual Funding Notice differ from the numbers presented in Aetna’s 2008 Annual Report, Financial Report?

A. Aetna’s Annual Report, Financial Report was prepared in accordance with U.S. generally accepted accounting principles (or, “GAAP”). GAAP requires us to calculate the Plan’s benefit obligations and the fair value of Plan assets using formulas that are different from the formulas required by the PPA and the Department of Labor, for the Annual Funding Notice.

Furthermore, the information in Aetna’s Annual Report, Financial Report is for both of Aetna’s pension plans. The Aetna Pension Plan (which is a tax-qualified pension plan) and an unfunded supplemental pension plan are combined for disclosure purposes in the Annual Report, Financial Report. The information in the Annual Funding Notice applies only to the Aetna Pension Plan.

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What is Aetna’s position on funding the Plan?

A. Aetna’s funding policy for the Plan is to contribute an amount for each Plan year that is no less than the minimum amount required by law under ERISA and the Internal Revenue Code. At its discretion, Aetna may contribute additional amounts in excess of the minimum required, and has made such additional contributions in the past. Aetna Inc. also limits the amount it contributes to no more than the maximum tax deductible amount determined under the Internal Revenue Code.

We do not have a contribution requirement for 2009; however, we intend to make a voluntary contribution of approximately $45 million to the Plan in 2009.

How safe is my Aetna pension?

A: The Company’s tax-qualified pension benefits earned (accrued) to date are secure for the following reasons:

• Aetna has invested in the Aetna Pension Plan. Aetna has made contributions into a separate trust outside of Aetna Inc. since the creation of the Plan in the 1950s to meet the long-term benefits promised to eligible participants and their beneficiaries. These contributions have been invested over the years in a diversified mix of assets. The Plan was adequately funded as of its last formal valuation (December 31, 2008); recent internal estimates show the Plan continuing to be adequately funded.
• Federal laws require companies to maintain certain funding levels. Aetna Inc. is responsible for ensuring that the Plan maintains a safe funded status. Federal laws are in place to enforce this obligation, including determining required annual contributions. Aetna has not been required to contribute to the Plan since the mid-1990s but has continued to voluntarily contribute to the Plan to make sure high funding levels are maintained.
• Pension benefits are protected by insurance. The Aetna Pension Plan is insured by the federally-chartered Pension Benefit Guaranty Corporation (PBGC). This insurance guarantees that pension benefits (up to certain prescribed limits) are protected regardless of the funding adequacy of the Plan and the financial health of Aetna Inc.

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Has Aetna made mandatory contributions to the tax-qualified Pension Plan in recent years?

A: Aetna has not been required to make contributions to the Plan since the mid-1990s. However, regular voluntary contributions have been made based on our internal calculations and funding standards to ensure adequate funding levels are maintained. Voluntary contributions totaled $45 million in 2008 and over $1.1 billion over the last 5 years (2004 – 2008).

What would happen to my tax-qualified pension if Aetna had financial difficulties?

A: Aetna would still be required to meet its pension obligations. If it was financially unable to do so, certain accrued benefit obligations would be assumed and honored by the PBGC (up to prescribed PBGC limits).

Can Aetna use the Aetna Pension Plan assets for its own corporate purposes?

A: No, the Aetna Pension Plan’s assets are required to be used for the exclusive benefit of Plan participants and to pay Plan expenses. Aetna’s Plan must be administered solely in the interest of, and for the exclusive purpose of providing benefits to Plan participants and beneficiaries.

Can Aetna reduce my pension benefits?

A: Aetna reserves the right to change, freeze or terminate the Plan in the future. However, under federal law a participant’s accrued pension benefit cannot be reduced as a result of such action.

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Investment-related

What is the size of the Aetna Pension Plan? How large are the annual benefit payments out of the Plan?

A: The Aetna Pension Plan had approximately $4 billion of assets at year end. Expected benefit payments for 2009 are approximately $280 million.

What types of investments are in the Aetna Pension Plan?

A: The Aetna Pension Plan maintains a diversified collection of investments mainly in U.S. and international stocks, fixed income securities (U.S. government and agency securities, corporate bonds, asset-backed securities and cash), and commercial real estate and farmland properties.

Recent Asset Allocations (approximate)
Equity (Stock) Securities 58%
Fixed Income (Debt) Securities 29%
Real Estate / Other 13%

Does the Aetna Pension Plan hold any Aetna-issued stock or bond securities?

A: The Plan has very limited direct exposure to Aetna Inc. (less than 0.1 percent). This exposure is due to passive investments in U.S. stock index funds that, by design, have stock ownership positions in every large, publicly-traded U.S company, including Aetna.

Are any assets in the Aetna Pension Plan difficult to value? How much and how are values assigned for these types of investments?

A: Almost all the investments in the Plan are valued daily based on market prices. More specifically:

• Approximately 88 percent of Plan assets are marketable securities which are traded on public exchanges daily.
• Commercial real estate and property holdings (11 percent of Plan assets) are appraised by independent professional appraisers and audited by external accounting firms annually. These values are reviewed and adjusted quarterly by outside real estate professionals responsible for overseeing these investments.
• Private equity investments (1 percent of Plan assets) are evaluated by general partners and internal private equity professionals quarterly. Outside accounting firms audit these private equity partnerships annually.

For more information regarding the Aetna Pension Plan, please consult the Plan’s Summary Plan Description which can be accessed through the internet, using your Social Security number and password at http://www.ybr.com/aetna.

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