1<br />Convergence in European Pension Markets<br />What are the main drivers to merge pension funds into a single Pan Eur...
Pressure on EU Pension Systems<br />EU Citizens’ feelings about future pensions (Eurobarometer 2010)<br />Pension will not...
Pressure on EU Pension Systems<br />EU Citizens’ feelings about future pensions (Eurobarometer 2010)<br />Pension wil be a...
Pressure on EU Pension Systems<br />Remedies<br />AFFORDABILITY AND SUSTAINABILITY OF STATE PENSION= life expectancy at ef...
Pension Risk at the Corporate Agenda<br />“Since 2009 pensions belong to the top 10 concerns of CFO’s” (CFO.com)<br />“Def...
Multinational Pension Asset Pooling<br />Company MNC<br />UK Pension Plans<br />Company MNC<br />GermanPension Plans<br />...
Multinational Pension Fund Pooling<br />Company MNC<br />UK Pension Plans<br />Company MNC<br />GermanPension Plans<br />C...
What Drives a Multinational to Pool their Pension Funds?<br />Reduced operational Risks(More grip and control)<br />Simpli...
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Philip neyt convergence in european pension markets

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Philip neyt convergence in european pension markets

  1. 1. 1<br />Convergence in European Pension Markets<br />What are the main drivers to merge pension funds into a single Pan European Pension Fund?<br />Philip Neyt, Chairman Belgian Pension Fund Association<br />Belgian Pension Fund Association - T : +32 2 706 85 45 - E : info@pensionfunds.be - www.pensionfunds.be<br />
  2. 2. Pressure on EU Pension Systems<br />EU Citizens’ feelings about future pensions (Eurobarometer 2010)<br />Pension will not change<br />Lower pension benefits<br />27%<br />27%<br />73%<br />26%<br />20%<br />Pension will change<br />Save more<br />Retire later<br />2<br />
  3. 3. Pressure on EU Pension Systems<br />EU Citizens’ feelings about future pensions (Eurobarometer 2010)<br />Pension wil be adequate<br />53%<br />47%<br />Fairly or very worried of pension income<br />3<br />
  4. 4. Pressure on EU Pension Systems<br />Remedies<br />AFFORDABILITY AND SUSTAINABILITY OF STATE PENSION= life expectancy at effective retirement age<br />ADEQUACY OF STATE PENSIONS= average state pension compared to average wage<br />OCCUPATIONAL PENSIONS: CLOSING THE GAP?= Assets/Liabilities ratio<br />EU <br />= <br />18,5 YRS<br />Work longer, Later/flexible Retirement<br />EU = 42 %<br />Need of occupational pensions<br />Annual Growth Rate (Liabilities-Assets) 2000-2010: 3%<br />More gripon pension (funding) risk (f.ex.Pan-European pension fund ….)<br />4<br />
  5. 5. Pension Risk at the Corporate Agenda<br />“Since 2009 pensions belong to the top 10 concerns of CFO’s” (CFO.com)<br />“Deficit in US States’ employee retirement funds grows to$ 1.3 trillion of 11.000 $ for each American” (Pew Center, 4/2011)<br />“FTSE 350 companies face a pension deficit of £177 bn or 78% of their earnings” (Hymans & Robertson, 3/2010)<br />“One third of FTSE100 companies can now not pay off deficits in any realistic timeframe from discretionary cash flow” (KPMG, 2010)<br />“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)”<br />5<br />
  6. 6. Multinational Pension Asset Pooling<br />Company MNC<br />UK Pension Plans<br />Company MNC<br />GermanPension Plans<br />Company MNC<br />FrenchPension Plans<br />Company MNC<br />GermanPension Fund<br />Company MNC<br />FrenchPension Fund<br />Company MNC<br />UK Pension Fund<br />PooledAssetVehicle<br />Manager A<br />Manager B<br />Manager C<br />Investments<br />6<br />
  7. 7. Multinational Pension Fund Pooling<br />Company MNC<br />UK Pension Plans<br />Company MNC<br />GermanPension Plans<br />Company MNC<br />FrenchPension Plans<br />Single Pension Fund Entity<br />Manager A<br />Manager B<br />Manager C<br />Investments<br />7<br />
  8. 8. What Drives a Multinational to Pool their Pension Funds?<br />Reduced operational Risks(More grip and control)<br />Simplified & centralized oversight<br />Enhanced risk assessment, consistent risk mitigation<br />Integrated global pension risk control<br />Unifiedgovernance<br />Consistent, central reporting/control<br />Efficiency gains(economies of scale)<br /><ul><li>Uniformity facilitates workforce mobility
  9. 9. Pooling of “know how” (deeper expertise)
  10. 10. Leaner admin and fewer providers and interfaces
  11. 11. Eases m&a transactions</li></ul>Cost savings(single European Entity)<br /><ul><li>Funding flexibility / predictable funding
  12. 12. Tax optimization
  13. 13. Lower regulatory burden (single supervisor)
  14. 14. Solidarity between subsidiaries or ring-fencing
  15. 15. Better cost transparency and lower operating costs</li></ul>8<br />
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