New York, 23 June 2011 Pan European Pension Funds, Now A Reality Belgian Economic Mission
New York, 23 June 2011
Pan European Pension Funds, Now A RealityBelgian Economic Mission
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Agenda
I. Opening Remarks Bob Kelly, Chairman and CEO BNY Mellon
H.E. Steven Vanackere, Deputy Prime Minister and Minister of Foreign Affairs and Institutional Reforms
II. SpeakersPhilip Neyt, Chairman Belgian Pension Fund Association
Convergence in European Pension Markets
Jean Paul Servais, Chairman Financial Services and Markets Authority (FSMA)
The Framework of Belgium’s New Dedicated Pan European Pension Vehicle
Leonardo Sforza, Head Research Europe and EU Affairs, Aon Hewitt
From Legislative Change to Business Practice: What Companies Can Gain
Henk Becquaert, Member of the Board of Directors FSMA
Thierry Verkest, Executive Director, Belgium and Luxembourg, Aon Hewitt
Case Studies
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Opening Remarks
Bob KellyChairman and CEO BNY Mellon
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Opening Remarks
H.E. Steven VanackereDeputy Prime Minister and Minister of Foreign Affairs and Institutional
Reforms
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Convergence in European Pension MarketsWhat are the main drivers to merge pension funds into a single Pan European Pension Fund?
Philip Neyt, Chairman Belgian Pension Fund Association
PRESSURE ON EU PENSION SYSTEMS
EU Citizens’ feelings about future pensions (Eurobarometer 2010)
Lower pension benefits
Save more
27%
26%20%Retire later
73%
27%
Pension will change
Pension will not change
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PRESSURE ON EU PENSION SYSTEMS
EU Citizens’ feelings about future pensions (Eurobarometer 2010)
53%47% Fairly or very worried
of pension income
Pension wil be adequate
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PRESSURE ON EU PENSION SYSTEMS
ADEQUACY OF STATE PENSIONS= average state pension compared to average wage
AFFORDABILITY AND SUSTAINABILITY OF STATE PENSION= difference life expectancy and average exit age from labor market
OCCUPATIONAL PENSIONS: CLOSING THE GAP?= Assets/Liabilities ratio
Need of occupational pensions
Work longer, Later/flexible Retirement
More grip on pension (funding) risk (f.ex.Pan-European pension fund ….)
Annual Growth Rate (Liabilities-Assets)
2000-2010: 3%
EU =
17 Yrs
EU =
42%
Remedies
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Pension risk at the corporate agenda
“Since 2009 pensions belong to the top 10 concerns of CFO’s” (CFO.com)
“Deficit in US States’ employee retirement funds grows to $ 1.3 trillion of 11.000 $ for each American” (Pew Center, 4/2011)
“FTSE 350 companies face a pension deficit of £177 bn or 78% of their earnings” (Hymans & Robertson, 3/2010)
“One third of FTSE100 companies can now not pay off deficits in any realistic timeframe from discretionary cash flow” (KPMG, 2010)
“A pension promise can be easy to make but expensive to keep. The immediate cash cost is only part of the problem; the longer-term calculation also involves the value of future pension promises. (The Economist, 4/2011)”
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Multinational Pension Asset Pooling
Company MNCUK Pension Plans
Company MNCGerman Pension Plans
Company MNCFrench Pension Plans
Company MNCGerman Pension Fund
Company MNCFrench Pension Fund
Manager A Manager B Manager C
Investments
Company MNCUK Pension Fund
Pooled Asset Vehicle
Single Pension Fund Entity
Multinational Pension Fund Pooling
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What drives a multinational to pool their pension funds?
Reduced operational Risks(More grip and control)
Simplified & centralized oversight
Enhanced risk assessment, consistent risk mitigation
Integrated global pension risk control
Unified governance
Consistent, central reporting/control
Efficiency gains(economies of scale)
Uniformity facilitates workforce mobility
Pooling of “know how” (deeper expertise)
Leaner admin and fewer providers and interfaces
Eases m&a transactions
Cost savings(single European Entity)
Funding flexibility / predictable funding
Tax optimization
Lower regulatory burden (single supervisor)
Solidarity between subsidiaries or ring-fencing
Better cost transparency and lower operating costs
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The Framework of Belgium’s New Dedicated Pan European Pension Vehicle
Jean Paul Servais, Chairman Financial Services and Markets Authority (FSMA)
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From Legislative Change to Business Practice: What Companies Can Gain
Leonardo Sforza, Head Research Europe and EU Affairs, Aon Hewitt
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Case Studies
Henk Becquaert, Member of the Board of Directors FSMAThierry Verkest, Executive Director, Belgium and Luxembourg, Aon
Hewitt
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