1 building pensions for the future what the dutch can learn from other countries? johan van egmond...
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Building pensions for the future
What the Dutch can learn from other countries?
Johan van Egmond
European Pensions Netherlands Summit:
Light at the end
of the tunnel
11 November 2009
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Agenda
1. Company pensions in crisis
2. Dealing with DB
i. Risk-sharing – learning from the Dutch
ii. De-risking – learning from the UK
iii. Total Retirement Outsourcing – learning from the US
3. Dealing with DC
i. Contributions – learning from the Australians
ii. Investment behaviour – learning from the Germans
iii. Education and communication – learning from the UK
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Company pensions in crisis
• DB as well as DC plans face severe times
Impact DB liabilities on balance sheets (IFRS accounting)
Coverage ratios DB plans below requirements
• DC contributions (too) low• Asset growth in DC plans insufficient
• Multinational organization faced with country differences, which poses additional challenges
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500.000,00
700.000,00
900.000,00
1.100.000,00
1.300.000,00
1.500.000,00
1999 2001 2002 2004 2005 2006 2008 2009 2010
$ m
ln
Liabilities
Assets
Crisis Underfunded pension funds in the US
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Crisis Recovery times 410(k) account balances
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Contributions
Pay outs
Investment Policy
Dealing with DB Risk-sharing: learning from the Dutch
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InsuranceCompany
Sponsoring corporation
Pension Fund
Active Pension Fund Members
Passive Pension Fund Members
Buy-in
InsuranceCompany
Sponsoring corporation
Pension Fund
Active Pension Fund Members
Retired Pension Fund Members
Buy-out
Risks
Deferred Pension Fund Members
Retired Pension Fund Members
BenefitsBenefitsBenefits
Be
ne
fits
Contribution
Bu
y-ou
t p
rice
Contribution
Bu
y in p
rice
Dealing with DB De-risking: learning from the UK
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Dealing with DBTotel Retirement Outsourcing: Learning from the US
TRO Provider
Sponsoring corporation
Pension Fund
ReturnPortfolio
Matching Portfolio:
Buy-in
Benefits
Contribution
TRO Services
TRO Services
Insurance Provider
Insurance
Policy
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Dealing with DCContributions
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Superannuation: learning from the Australian
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Dealing with DCInvestment behaviour: learning from the Germans
0
0,2
0,4
0,6
0,8
1
1,2
Other
Cash
Bonds
Eq
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Life cycle strategies / Hedging of risks: learning from DB
Life Cycle
Equities
Money Market
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Dealing with DCEducation: learning from the UK
‘Good money sense needs to be as much part of people’s lives in the twenty first century as healthy eating and keeping fit.’
‘The UK requires a Money Guidance service that is ‘impartial and on the user’s side; available to all; preventative rather than just for those in crisis; supportive and coaching in style; and delivered in an environment not linked directly to a product sale.’
From: Governmental working group Generic Financial Advice, chaired by Otto Thoresen (CEO AEGON UK), March 2008
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Remove investment related risk
Rem
ove
act
uar
ial
risk
Index Based Mortality Swaps
Full Buy Out
Open DB Plan
Buy In
Full Longevity Risk Transfer
Cash Flow MatchingDuration Overlays
Inflation Overlays
Summary: dealing with DBFind the appropriate solutions
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Summary: dealing with DBPlanning your way out of the financial crisis
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Summary: dealing with DCFind the appropriate solutions
• Building pensions for the future
• Making “promises” you can keep
• …save more auto enrolment, behavourial finance
• …invest better life cycles, guarantees
• …plan dissavings phase allignment saving and dissaving
• …understand communication and education
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AEGON Global Pensions
Whitepapers:
“Planning your way out of the financial crisis” (2009)
“Making promises you can keep – Building pensions for the future” (2009)
www.aegonglobalpensions.com
Global Pensions Solutions:
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Thank you
This presentation contains general information only and does not constitute a solicitation or offer. No rights can be derived from this presentation. Please be advised that any fees, performance and/or
cost indications in this presentation are for information purposes only. AEGON Global Pensions, its members and any of their affiliates or employees do not guarantee, warrant or represent the accuracy or
completeness of the information contained in this presentation.