Report by the Task Force for the Establishment of a pan-European Retirement Savings Vehicle for Research Professionals

DG Research and
Innovation
Report by the Task Force for the
Establishment of a pan-European
Retirement Savings Vehicle for Research
Professionals
Brussels, 20 December 2013

TABLE OF CONTENTS
1. Foreword 1
2. Aon Hewitt Report 7
3. Task Force Members 83
4. Terms of Reference 85

1
TASK FORCE FOR THE ESTABLISHMENT OF A PAN-EUROPEAN
RETIREMENT SAVINGS VEHICLE FOR RESEARCH PROFESSIONALS
FINAL REPORT
FOREWORD
1. BACKGROUND AND MANDATE
In 2009 the European Commission commissioned a feasibility study of a pan-European
pension fund that could match the needs of researchers in the European Union (EU) and the
European Economic Area (EEA). The study was carried out by Hewitt Associates on behalf
of the Directorate-General for Research and Innovation (DG RTD) over the period June 2009
– April 2010. Within this project, Hewitt Associates examined the legal, technical and
financial terms and requirements that should be considered to set up a viable pan-European
framework for occupational pension arrangements for researchers. The report found that
there is a demand for a cross-border pension fund for EU/EEA based researchers, and that it is
possible in principle to establish such an arrangement. Based upon the outcome of the
feasibility study the European Commission launched a project in 2011 to monitor the
implementation of a pan-European Pension Fund. The aim of the three year project was to
support employers willing to prepare and establish such a fund.
In 2011, information workshops were organised for employers of researchers. They provided
information to employers about the possibilities to set up a pan-European pension fund,
highlighted the advantages and disadvantages and provided a platform for exchanging
experience as to how public and private sector employers have approached the question of
cross-border pension funds for their employees. Three specific information meetings
gathered over 160 participants representing 80 institutions, several of which are membership
organisations or large scale international institutions. An ad hoc meeting between pension
providers, insurance companies and the Director General of DG RTD, Mr. Robert-Jan Smits,
took place on 12 July 2011.

2
In 2012, four local information workshops were organised in Belgium, Italy, Austria and UK.
The aim of the workshops was to examine in more depth the regulatory environment and help
employers to fully understand the costs and benefits of setting up a pension fund. The pan-
European pension fund for researchers’ initiative is included in the list of actions in the
February 2012 White Paper "An Agenda for Adequate, Safe and Sustainable Pensions" (COM
(2012) 55). With the White Paper, the Commission presents different ways in which Europe,
through growth-enhancing retirement reforms, can secure adequate pensions over the coming
decades. In July 2012 the pan-European pension fund was included in the European Research
Area Communication (COM (2012) 392 final). The initiative was endorsed by the League of
European Research Universities (LERU) and the European University Association (EUA) in
the accompanying memorandum of understanding. By the end of 2012, a core group of
interested employers and employer representatives with an in-depth understanding of the
technicalities gathered to prepare the ground to set up a pan-European supplementary pension
fund.
In April 2013 the core group of representatives decided to establish a “Task Force for the
establishment of a pan-European retirement savings vehicle (RSV) for Research
Professionals”. The Task Force membership includes representatives from the Technical
University of Vienna, the Association of Universities in the Netherlands (VSNU), Elettra
Sincrotrone Trieste, the Italian National Research Council, the Central European University,
the European Organization for Nuclear Research (CERN), Gent University, Cambridge
University, the League of European Research Universities (LERU) (Observer) and the
European University Association (EUA) (Observer). The Terms of Reference of the Task
Force state that the purpose of the group is to prepare a proposal together with AON Hewitt
on the establishment of a pan-European RSV for Professionals employed by research
organisations. The aim of the Vehicle is to facilitate the removal of one of the barriers to the
mobility of Professionals, by providing them with retirement benefits in addition to any state
retirement benefits. The role of the Task Force is to collect and analyse data, and
subsequently report its findings and provide recommendations on the establishment of a RSV.
In October 2013 the pan-European pension fund initiative received further confirmation when
the European Council gave its stamp of approval to the initiative by calling for adequate
pensions for researchers.
Finally, on 20 December 2013 Aon Hewitt together with a Task Force of employers and
employer representatives submitted the final report to the European Commission.
2. TASKFORCE ACTIVITIES AND FINDINGS
During 2013, the Task Force met six times. All meetings were assisted by the Task Force's
consultant, AON Hewitt. At the end of its mandate, AON Hewitt delivered a report
summarizing its advice to the Task Force. This report is enclosed on pages 7 to 82.

3
With the help of its consultant, AON Hewitt, the Task Force started its mandate by exploring
the possibilities opened by the European IORP (Institutions for Occupational Retirement
Provision) directive of 2003, including, inter alia:
 the possibility for employers to sponsor local retirement plans affiliated to a single
European RSV able to operate across borders,
 the possibility for participants to remain affiliated to a single pension plan as they
move from country to country,
 the administrative requirements related to setting up a pan-European RSV, which
would have to serve participants and retirees located in several countries,
 the possibility to pool assets across countries in order to achieve efficiencies and
economies of scale, and
 the potential use of insurance arrangements as a transitional measure prior to
implementing an IORP.
As a result of this examination, the Task Force concluded that it is technically feasible to
establish a single RSV open to employers located in a number of different countries. Such a
vehicle would allow employees to remain affiliated to the same entity, provided their
employer participates in it (i.e., the employer is willing to make employer contributions to the
pan-European vehicle). To comply with the social and labour laws of various countries, the
RSV would offer country-specific retirement and insurance plans.
To seek validation of its findings, the Task Force also sought to clarify the state of best
practice by consulting with several providers of savings and retirement products, who are
active across several European countries. These discussions validated the Task Force's
findings, but also highlighted the current absence of any pan-European RSV taking full
advantage of the possibilities opened by the IORP directive. In other words, the Task Force
established that the market does not currently offer any suitable pan-European retirement
solution.

4
The Task Force discussed the conditions for the potential establishment and roll-out of a pan-
European RSV. With AON Hewitt's advice, it was agreed that such a roll-out would have to
be a long-term undertaking, which would have to be approached with a time horizon of at
least a decade. In a first phase, the vehicle could be registered in up to three countries.
Additional countries would then be added, with the pace of progress limited by the resources
needed to establish and register the vehicle in each country. AON Hewitt estimated that, if
properly staffed, such an effort could result in adding around three countries per year. From a
practical standpoint, it was agreed that the RSV should take the form of an IORP.
Nevertheless, it was agreed that country-specific insurance arrangements could be established
as a transitional and temporary measure before enrolling in the pan-European IORP.
To estimate the financial effort required to launch a pan-European RSV, the Task Force
reviewed a potential roll-out plan prepared by AON Hewitt. This plan (described on page
54), shows that the RSV can become self-sufficient in the future, but the point in time at
which this will happen will depend on the size of the invested assets and annual contributions
being invested as well as the actual expenses incurred. An illustrative scenario developed by
AON Hewitt, based on conservative assumptions, showed that the RSV would need some 15
years until it becomes self-sufficient. Therefore, an initial capital investment will be required
to set up the vehicle. The estimated net investment costs are estimated at 1.3 million EUR in
the first year of operation, 0.8 million EUR in the second year, and 0.75 million EUR in the
third year.
From a practical standpoint, the operation of such a RSV would require the contribution of a
number of providers, including, inter alia, in the areas of pension administration, financial
services, accounting services, legal services, audit services, and related consulting services.
Therefore, the Task Force concluded that a Consortium of interested and participating
employers would need to be established with the mandate to set up the RSV and to make
arrangements for its operation and administration. The operating model recommended by the
Task Force for the RSV is illustrated on page 32, and shows the roles of Consortium, IORP,
and potential insurance arrangements, as well as that of some suppliers. The Task Force
obtained legal advice indicating that the "International Association" legal form available
under Belgian law would offer an appropriate legal structure for such a Consortium.
Finally, the Task Force agreed that a pan-European RSV would not only be feasible, but
would also reinforce European competitiveness by facilitating the movement of participants
across the European Research Area.

5
3. RECOMMENDATIONS
Having established the technical feasibility of a pan-European pension plan, and having
considered possible arrangements enabling its implementation, the Task Force makes the
following recommendations to the European Commission (EC):
1. that a Consortium be set up, whose membership be opened to institutions, which are
interested in the possibility of sponsoring a pan-European RSV for their eligible
employees;
2. that the objective of the Consortium be to design and implement an IORP and/or
insurance arrangements, following the model proposed by AON Hewitt (on page 32),
with the objective to provide access to a pan-European retirement savings and
insurance vehicle for eligible employees of the Consortium's members;
3. that the Consortium's governance follow European best practices applicable to such an
institution, including, inter alia, with regards to the composition of its board of
directors, its terms of reference, its rules of procedure, its administration and audit
process;
4. that the Consortium obtain all necessary advice, and take any and all necessary actions
to implement the proposed operating model as soon as practicable;
5. that the Consortium, to the extent feasible, make every reasonable effort to help
member institutions sponsor participation of their eligible employees to the pan-
European retirement program, including, inter alia, providing access to legal, actuarial
and other services to member institutions;
6. that the Consortium adopt a set of design parameters defining the benefits to be
provided by the pan-European RSV;
7. that the European Commission seek and obtain all necessary advice, and take all
necessary action to support the set up the Consortium and its future operations;
8. that the European Commission provide appropriate financing to allow effective
operation of the Consortium and of the RSVs selected by the Consortium, for the
period of time necessary until the RSV (and, as the case may be, associated insurance
programs) have achieved such a state where their income is sufficient to allow them to
achieve their objective without the need for additional sources of funds;
9. that the European Commission make every reasonable effort to be kept advised of the
Consortium's activities, including, to the extent possible and feasible, facilitating and
supporting the Consortium's work in furtherance of its objectives; and

Setting up a pan-European supplementary
pension fund for Researchers
The Task Force’s recommendations and next steps
20 December 2013
Prepared by Thierry Verkest and Jacqueline Wills
Presentation to EC Researchers 7

20 December 2013 8
Introduction
The purpose of this pack is to summarise the work done by the Task Force to date, the conclusions they have reached
and the necessary next steps.
(*) Source: A Reinforced European Research Area Partnership for Excellence and Growth – COM(2012) 392 final
One of the ERA’s priorities is an open labour market for researchers – to ensure the removal of
barriers to researcher mobility, training and attractive careers*. With this in mind, the European
Commission initiated a project in 2009 to investigate the feasibility of establishing a pan-European
retirement savings vehicle for professionals employed by research organisations. In April 2013 a
Task Force was established to prepare a proposal for the creation of this vehicle.
This pack has been prepared in cooperation between the Task Force and Aon Hewitt with the
support of the European Commission.

20 December 2013 9
Contents
1. Objectives
2. Project background
 Summary
 Feasibility study
 Key advantages
 Initial conclusions
3. Plan principles
 Membership
 Vehicle
 Location
 Benefit design
 Contributions
 Administration
 Investment
 Taxation
4. Operating model
 Consortium
 IORP
 Asset pooling
 Risk pooling
 3rd pillar pensions
5. Next steps
 Project plan for 2014 and expected budget
 Communication strategy
Appendices
 Selecting an insurance company
 Example of a mobile researcher
 Leaflet
 Design parameters

20 December 2013 11
Objectives
A key priority is for the European Research Area (ERA) to be more open, competitive and attractive. Retirement
benefits has been identified as one of the barriers to this.
To remove this barrier it is necessary to ensure continuity of the accumulation of pension benefits as
professionals move to different organisations and to different countries.
In order to achieve this objective it will be necessary to:
 Make supplementary pensions compatible with mobility
 Establish a pan-European pension arrangement to the benefit of researchers
 Secure adequate, safe and sustainable pensions for researchers
 Offer market competitive supplementary pensions through asset pooling
 Ensure multi-country pension tracking through web-based communication
This objective can only be met if a critical mass is achieved, in terms of the number of countries, participating
organisations and members.

20 December 2013 12
European Economic Area (EEA)
• The most important HR challenge indicated by
participating organisations is to attract and retain key
employees
• 76% of employers believe that complementary
pension benefits to R&D staff will be more important in
the future to retain and attract key employees
• Most employers perceive a potential EU cross-border
pension arrangement to be relevant and valuable.
The key drivers for such arrangements are: policy
consistency, better managing employee mobility and
meeting employee expectations
• The main reasons to provide occupational pension
benefits beyond regulatory requirements indicated by
survey participants are related to the need of being in
line with market practices and attracting talent
Source: Employers' survey results on current practices and willingness to establish
pan-European arrangements from the Feasibility Study for Creating
an EU Pension Fund for Researchers, dated 30 April 2010

Section 2: Project Background
 Summary
 Feasibility study
 Key advantages
 Initial conclusions
13

20 December 2013 14
Summary
 In 2009 the European Commission engaged Aon Hewitt to prepare a "Feasibility study of a pan-European pension fund for EU
researchers". The objective of this study was to report on the legal, technical and financial terms and requirements that should be
considered for setting up a viable pan-European framework of occupational pension arrangements that could best match EU
researchers' needs.
 Preliminary findings were presented to the ERA Steering Group on Human Resources and Mobility, who help to oversee the
implementation of the ERA Initiative on a "European Partnership for Researchers".
 In 2011 the European Commission launched a three year project (2011-2013) that will promote the provision of supplementary
pensions to mobile researchers. The European Commission has a facilitating role and provides on-going support and advice to
organisations that employ researchers in the ERA
 The first year (2011) focused on providing information to employers on the administrative, legal and financial requirements for
setting up a Retirement Savings Vehicle (RSV). Three specific information meetings were held in Brussels with interested
employers and stakeholder organisations. An additional meeting which brought together pension providers was held the same
year.
 The second year (2012) was dedicated to mobilising interested parties to build a critical mass of participating organisations. It
included four workshops that examined in more depth the regulatory environment and helped employers to fully understand the
costs and benefits of setting up a pension fund. These workshops were held in different Member States.
 The third and final year (2013) of the project has been dedicated to considering the practicalities of establishing an RSV for
researchers. The role of the Task Force is to collect and analyse data, and subsequently report its findings and provide
recommendations on the establishment of a RSV. The Task Force should report its proposals and conclusions to the appropriate
decision-making body within each respective organisation.

20 December 2013 15
Feasibility study
Definition of ERA: a unified research area open to the world based on the Internal
Market, in which Member States strengthen their scientific and technological
bases, their competiveness and their capacity to collectively address grand
challenges.
Definition of ERA: a unified research area open to the world based on the Internal
Market, in which Member States strengthen their scientific and technological
bases, their competiveness and their capacity to collectively address grand
challenges.
Source: Lisbon Treaty and European Council Conclusions
EC sponsored feasibility study for an EU Pension
Fund for Researchers (2007-10)
Key Conclusions:
 Cross-border engineering relevant and pertinent
 Increasing importance of complementary pensions
 EU Directive 41/2003 provides appropriate legal framework for
countries in the EEA
 Multinationals are establishing pan-European pension funds
 Gradual implementation on a step by step basis
 Common standards by country at least
 Decision to join is up to the sponsor
 EC support and facilitator (not decision maker)
http://ec.europa.eu/research/era/areas/r
esearchers/researchers_en.htm

20 December 2013 16
Key advantages indentified of a pan-European pension fund for Researchers
General
 Providing researchers with access to a high quality pension plan, in each country they work in within the EEA
 Removing pensions as a barrier to the mobility of researchers
Managing
pensionrisk
 Creating a European-wide governance
framework
 Taking control by centralizing pension risk
management
 Efficient decision-making based on
skills/expertise of experienced Board members
Cost
optimisation
 Pooling assets: increase diversification / access
to higher-quality investments
 Pooling risk benefits
 Reducing cost through economies of scale
Operationalefficiency
 Fewer providers / interfaces: increase quality
and purchasing power
 Reduce local internal management time /
simplified governance
 Facilitates consistent reporting and
implementation strategies
Employeeexperience
 Better value for money, improving benefit
outcome
 Consistent branding with a common look and
feel
 Consolidated and simplified multi-country, multi-
organisation benefit statements
 Ensures coverage can be provided even for
short periods of service
 Improved member security
 Efficient/appropriate coverage of internationally
mobile employees

20 December 2013 17
Initial conclusions
 Create a pan-European defined contribution (DC) occupational pension plan, as made possible by the 2003 EU
Pensions Directive (the “IORP Directive”)
– Avoid creating liabilities for participating organisations
– IORP = Institutions for Occupational Retirement Provision; includes (almost) all legally-separate pension
arrangements in the EEA
 Maximise participation
– Show the attractiveness of the concept to all organisations employing researchers in Europe
 Look for a cost efficient administration system
– Multi country, multi organisation, multi plan, multi currency and multi lingual (to the extent that local social
and labour law makes it necessary)
– Automated data processing
 Communication is key
– Use web based communication
– Focus on clear and understandable information
 Consider achieving critical mass
– Number of participants
– Total asset value
– Annual contribution level
 New plan will be part of a “mosaic” solution
– It will not necessarily replace existing plans, e.g. USS, rather “fill in the gaps”

Section 3: Plan design
 Membership
 Vehicle
 Location
 Benefit design
 Contributions
 Administration
 Investment
 Taxation
18

20 December 2013 19
Membership
 The Task Force have agreed that the Target Population will be Professionals employed by research organisations
within the EEA
– “Professionals” includes qualified employees or contractual agents of an institution whose primary activity shall
include research; by way of demonstration, but not limitation, this would be an administrator, engineer, scientist or
technician
– “Researchers” may be defined using the internationally recognised Frascati definition of “Professionals engaged
in the conception or creation of new knowledge, products, processes, methods and systems, and in the
management of the projects converted”
Source: http://ec.europa.eu/euraxess/index.cfm/rights/definitions
– This may not include all countries in the ERA; the IORP Directive applies to the EEA only
 Priority should be given to:
– Researchers who are not currently able to be members of a pension plan, and for which there is currently no
viable local solution
– Private institutions and public institutions employing in general only non-civil servants
– Researchers who are mobile
– Researchers who are currently members of a pension plan, but would benefit from the IORP solution through
access to better quality investments and relatively lower asset management charges
 The RSV should also be open to:
– Researchers without employment contracts
– Researchers coming from outside the EEA, into the EEA (who are typically put on local contracts)
– Employees other than researchers who work for the same organisation as the researchers

20 December 2013 20
Vehicle
Requirements
 Ability to offer a consistent and flexible benefit design specific for researchers in Europe in accordance with
local SLL
 All EEA countries should eventually be included in the IORP, providing retirement and death benefits
 Online member access should be made through a single multi-country, multi-organisation platform
 The product needs to be highly market competitive to attract members/sponsors with existing arrangements.
Starting with a maximum number of countries and organisations will help to achieve this
 It would be preferable to have a single point of contact who can provide information on tax, administration,
legalities etc
 Researchers will need to trust the cross-border pension arrangement – so branding/sponsorship is critical
It has been agreed that the ideal approach is to:
 Establish a cross-border IORP together with a network of local insured arrangements so that:
– From day 1 the arrangement will cover the maximum number of countries
– The IORP will provide retirement and death benefits, including different countries, on a step by step basis
– Local insured arrangements will be applicable in countries not yet part of the IORP
– Both employees and researchers without employment contracts (who would not be able to participate in
the IORP directly) will, where it is possible, have the same experience/opportunities
 The insurance company should also offer:
– An asset pooling solution for the IORP and local contracts
– A risk pooling solution covering death/disability benefits

20 December 2013 21
Vehicle
Closed versus open
Description
 IORP is an existing or new vehicle created by the
Consortium, financing benefits just for the
Researchers
 IORP is governed by the Consortium who has
responsibility for establishment, administration and
compliance (unless outsourced)
Pros/cons
+ More flexibility for design and financing
+ Full cost transparency and benefit from economies
of scale
+ Consortium can have greater control
- Higher explicit implementation and ongoing costs;
so only cost effective for larger groups
Description
 IORP is created, governed and owned by a
(financial) provider, and manages benefits for
various employers
 Fully bundled proposition including investments and
administration providing an “off-the-shelf”
standardised DC solution
Pros/cons
+ Fewer implementation issues
+ Administration and compliance is provider’s
responsibility
- Limited flexibility
- Lack of transparency and potentially higher charges
- Immature market
Multi-employer “open” IORP
(Product)
“Closed” IORP
It has been agreed to establish a “closed” IORP rather than participating in a multi-employer “open” IORP
product for the following reasons:

20 December 2013 22
Location
Considering that a “closed” IORP will be established it has been agreed that the Belgium OFP provides the most
appropriate framework.
 In the original feasibility study 10 retirement vehicles in six different EEA locations were compared and
contrasted in terms of scope of benefits, governance, financing and a number of other characteristics
 It was concluded that the most practical locations/vehicles were primarily in Belgium (a new vehicle has been
created – “OFP”), Ireland (via a trust based arrangement), or Luxembourg (SEPCAV and ASSEP)
– All three countries have been positioning themselves as locations of choice
 Belgium is preferred for the following reasons:
– New legislation, fully in line with EU Directive
– Regulator accessible, open-minded and supportive
– No quantitative investment and financing regulations
– Freedom of governance framework according to specific situation
– Zero tax base
– Establishment of pension councils (committees) to comply with local social regulations
– More than 20 year of experience with pension funds
– Multi-cultural and multi-lingual community in the centre of Europe

20 December 2013 23
Benefit design
 In the earlier feasibility study a preference emerged for a defined contribution plan, potentially with some form of investment
guarantee option where this is required or desirable. Defined contribution plans avoid the need for cross-subsidies between
different organisations
 It will be necessary to establish different country sections to ensure compliance with the different specific social and labour law
requirements of various EEA member states. These differ in several ways including:
– Permitted contribution structure (flat rate, age-related)
– Guaranteed interest rates
– Maximum legally permitted contribution amounts
– Maximum tax-effective contributions
– Ability of members to make additional voluntary contributions to the same pension fund
– The right for individual members to determine how their contributions are invested
– Flexibility in benefit payment form – pension and or lump sum
– Indexation requirements
– Eligibility conditions
– Minimum/maximum retirement age
– Provision of additional risk benefits
– Language and information requirements
– Member representation
 In terms of the overall design, it is possible to design a common overall structure which has the ability to meet all requirements,
and then make those parts available or mandatory on a country specific basis to comply with the social and labour law
requirements

20 December 2013 24
Benefit design continued…
 Contribution levels should differ by country taking into account existing levels of local social security and other mandatory
retirement arrangements
 There needs to be an appropriate balance between flexibility and administrative efficiency
– Each country should have a common benefit design to facilitate cost-effective administration
– However, even within the common country design, there can be some variability (such as contribution level) as far as this
variability is supported automatically in the administration system
 Flexibility in contribution design will also be important where certain groups of researchers are covered under existing local
pension arrangements and either choose or are required to remain in these arrangements. In these cases, it may be desirable to
offer researchers the opportunity to contribute to the cross-border pension fund to enable them to make additional retirement
saving where this is possible
 A common theme emerging from our analysis is that legislation, collective labour agreements may need to be addressed in some
countries where it appears impossible to provide researchers with access to a different pension arrangement that other
employees working within the same organisation or sector
The Task Force have analysed the main design features of a defined contribution plan and which features should/would
need to vary by country and/or organisation. The results of this analysis are detailed in Appendix 5 and will be used as
the basis for writing the plan rules. New countries will be incorporated using similar principles

20 December 2013 25
Contributions
Target benefit
Following the feasibility study an additional piece of work was carried out to calculate a recommended contribution
structure based on the target replacement ratio agreed by the Advisory Group
 Typically, target benefits from pension plans are expressed as replacement ratios
– Replacement ratio = Post-retirement income
Pre-retirement income
– Pre-retirement income is defined as the career-average (re-valued) salary
– Post-retirement income is pension, both from the state and employer-sponsored schemes
– Assumes a full career of 40 years
• This is a critical assumption. To reach the same replacement ratio over a shorter career higher
contributions would be required
– Gross of taxes
Based on a flat-rate contribution structure and a preliminary set of assumptions modelling showed that a
contribution of 18% of gross salary was needed meet the target gross replacement ratio of 70%.
We suggest that the assumptions underlying this conclusion are revisited before finalising the recommended rate.
 This rate then needs to be adjusted so as to:
– Allow for Social Security and statutory provisions, which provide material retirement benefits in some countries
– Split contributions into those paid by the employee and those by the employer

20 December 2013 26
Contributions
Example rates
The following table summarises the recommended contributions calculated for some sample countries:
We suggest that the assumptions underlying these numbers are revisited before finalising the recommended rates
Public sector Private sector Pensions ceiling
France  Nil  1% n/a
Germany  7% below ceiling
 8% in excess of
ceiling
 7% below ceiling
 8% in excess of
ceiling
State earnings ceiling
2010: €66,000
Spain  Nil  Nil n/a
UK  0% below ceiling
 18% in excess of
ceiling
ceiling
Basic state pension
2010: €5,500
Italy  2% below ceiling
ceiling
ceiling
State earnings ceiling
2010: €92,400
Poland  4%  4%
Austria  18%  0% below ceiling
ceiling
Social Security
Contribution Ceiling
2012: €4,230 p.m.

20 December 2013 27
Contributions
Employee cost and risk benefits
 So far, no final decision has been made on what part of the contribution, if any, will be paid by the researcher
– This decision can ultimately be left to each of the participating organisations although we recommend that
a suggested rate is calculated for each member country to help guide member organisations
 We note that:
– In many countries a split of 1/3rd employee and 2/3rds employer will be acceptable
– In some countries employee contributions are not tax effective or are not common
• In this case the employee contribution could be set to zero with no corresponding increase in
employer contribution
• This decision can ultimately be left to each of the participating organisations although we recommend
that a “suggested rate” is calculated for each member country to help guide member organisations
 In some countries death benefits are provided in addition to, or integrated with, the value of the accrued
retirement account. In these instances we suggest that death benefits are provided. The vehicle should be
able to benefit from economies of scale and obtain reinsurance at a more competitive rate than the local
organisation and benefit from multi-national, multi-organisation risk pooling.
– A suggested level of death benefits should be calculated but the eventual coverage should be left to the
participating organisations

20 December 2013 28
Administration
Required capabilities
 Multiple employers with no
financial links
 Based in multiple countries
 Employers with no common HR
IT system
 With plan designs that vary by
host state (possibly even within
host states)
 With earnings, contributions and
benefit accumulation in different
currencies and
 With data managed and
controlled by many different
people
Member Service Centre
 Multilingual
 Call center
 Interactive internet access
 Paper support
Member Administration
 Recordkeeping of member events: new joiners,
update census data, salary updates, ...
 Management of actives and inactives
 Changes in contribution
 Investment switches
 Management of retirements, deaths and
departures
Benefit administration
 Calculation of benefit entitlement
 Benefit payments (multiple currency, tax
regime, country regulations)

20 December 2013 29
Investment
 The cross-border pension fund will need to offer a range of investment funds to support the defined contribution structure and be capable of
meeting local investment requirements in terms of the required currencies and guarantees. These will be made available to each country
section depending on local requirements, and should be offered in as consistent a manner as possible
 For countries where social and labour law does not allow investment choice e.g. Spain, it will be necessary to develop a suitable investment
strategy. There are a variety of approaches possible ranging in complexity and cost
 Some countries require a minimum investment guarantee e.g. Belgium. We recommend, if possible, that such guarantees should be
provided directly through the investment options rather than as a guarantee from the sponsoring entity. This will result in a lower expected
investment return as the guarantees have a cost. However, it is considerably administratively simpler and takes account of the need to avoid
cross-subsidies between sponsoring entities.
– Based on current market rates, it may not be possible to obtain insurance that will meet the minimum investment guarantees. A
decision will then need to be made whether to exclude these countries or to set up a cash balance section of the plan
 Some countries permit members to choose how to invest their contributions on an individual basis. For these countries, it will be necessary
to offer a reasonable choice of investment options and decide on an appropriate default strategy on a life cycle basis. Members who do not
wish to be invested into the default strategy should be able to elect to move existing holdings, future contributions or both
 Further thought should also be given to appropriate member education so they appreciate the potential impact of different investment
choices
 Once the design of the cross-border framework has been finalised, it will be necessary to decide the most appropriate balance of segregated
and pooled investment approaches
 Finally, the investment approach will need to be multi-currency notably to reduce currency risk exposure and to reflect the different
currencies in operation within the EEA

20 December 2013 30
Taxation
From the member’s perspective the choice between a pan-European pension plan and a series of local plans
is tax neutral
 The European Commission issued a communication which requires all Member States to apply non-discriminatory tax
treatment to pensions. Specifically, Member States are required to provide identical tax treatment for contributions
and benefits from IORPs whether established in their own country or in another EEA Member State.
– The conclusion of the communication states that: “The Commission considers that discriminatory tax treatment of
pension and life assurance policies concluded with pension institutions established in other Member States is
contrary to the fundamental freedoms of the EC Treaty. The Commission shall monitor the relevant national rules
and take the necessary steps to ensure effective compliance with the fundamental freedoms of the EC Treaty,
including bringing the matter before the Court of Justice on the basis of Article 226 of the EC Treaty.”
Source: http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexplus!prod!DocNumber&lg=en&type_doc=COMfinal&an_doc=2001&nu_doc=214
– Since the Communication was issued in 2001, the EC have enforced this communication rigorously by taking any
Member States to the ECJ. Usually, just a note from the EC has been enough to correct any discriminatory
practice.
 Tax will be paid on contributions in the same way as if the member were in a local employer sponsored pension plan.
The fact that the pension plan may be located in a different country within the EEA does not affect taxation of
contributions. There will be no double taxation.

Section 4: Operating model
 Proposed operating model
 Consortium
 IORP
 Asset pooling
 Risk pooling
 3rd pillar pensions
31

20 December 2013 32
Proposed Operating Model
 Organisations choose whether or not to join the Consortium
 On joining the Consortium, Organisations (subject to any
local contract requirements) will be able to enrol their
employees into the IORP (2nd pillar). Contract workers will
be able to make contributions to the insurance product (3rd
pillar)
 The Consortium must initiate a public tender in order to
appoint the providers. Individual organisations will not
need to initiate separate public tenders
 If the Consortium wishes to change their providers, they will
need to go through a public tender. The Consortium will
only appoint an insurance company, consultants and legal
advisors and will select the IORP vehicle
 Other providers are selected by the IORP, also through
public procurement
 The Consortium and IORP will include representatives from
member organisations. Their role will be mainly
supervisory and they will be responsible for making
strategic decisions, defining policies and operational
activities. We recommend operational activities are
outsourced.

20 December 2013 33
Consortium
 The Consortium will:
– Be a non-profit legal entity, representing the sponsoring organisations
– Give instruction to the RSV to manage the pension plan as a prudent person
– Choose provider(s) to work with by public tender (who can set up the IORP)
– Receive subsidies to perform its activities
– Specify a common design (which will vary by country, where necessary/appropriate)
 We recommend that the governance structure of the Consortium is as follows:
Taking care of compliance with local social and labour
law and other country related issues, can have
employee and pensioner representation, information
and consultation rights only
Operational responsibility and decision-making
Information and consultation rights only
Take strategic decisions as listed in byelaws
Role
2 meetings a yearElected by Member A of relevant countryCountry
management
committees
12 meetings a yearElected by Member AExecutive committee
4 meetings a yearCandidate members, interested in and/or having
the intention to join the RSV
Member B
4 meetings a yearFounding members and organisations having
joined the RSV and paying contributions
Member A
Expected time
commitment
(in the long-term)
Membership requirementsType

20 December 2013
Consortium continued…
 Assuming the Consortium will be set up in Belgium two of the possible legal vehicles are an European
Economic Interest Group (EEIG) and an International Association (IA). The former is a European wide vehicle
whereas the latter is a Belgium specific vehicle.
 These suggestions are based on the Consortium being:
– A permanent structure
– A Not For Profit Organisation (NFPO)
– International
 The IA is expected to be the more practical solution as:
– The admission criteria for new members can be fixed in bylaws, whereas in the EEIG the unanimous
consent of all current members would be required
– Members are not liable for the international association’s obligations
– Membership is defined in the articles of association, rather than being subject to unanimous consent of all
current members as is the case in the EEIG
– Voting rights are defined in the articles of association, rather than each member automatically being given
one vote as is the case in the EEIG
34

20 December 2013
IORP Stakeholders
35

20 December 2013 36
IORP Governance Structure
Role: Mainly
supervisory and for
strategic decision
making
Members: Member A of
the Consortium
Time commitment: 1
meeting a year
Role: Mainly operational
Members: Usually 6-10,
appointed by General
Assembly
Time commitment: 4
meetings a year
The Board of Directors
may delegate activities
to various committees
e.g. Investment,
Management
Audit and Compliance
Time commitment: 4
meetings a year
(optional)

20 December 2013
Governance and Operational Structure
General Assembly (compulsory)
• Highest level governing body within the OFP, and consists at least of representatives of the founders/sponsoring undertakings
who have schemes within the OFP
• Role is mainly supervisory and for strategic decision making e.g. approval of annual accounts, financing plan, statement of
investment principles, management agreement, review bylaws, appointment/discharge of Board members, wind-up of the OFP
• Made up of Ordinary and Extraordinary members. Only Ordinary members get voting rights and these could be defined as e.g.
pension plans with 100+ members
Typically discussed in light of the requirements of each Cluster / Country. As new countries are added new members may need
to be admitted, subject to the approval of the FSMA (the Belgium regulator)
The OFP Board of Directors (compulsory)
• Defines general policy of the OFP and responsible for operational activities
• Minimum of two board members, appointed for a maximum of 6 years (re-election allowed)
• Responsible for operational activities, and members must:
 Have the necessary professional qualifications
 Have sufficient knowledge and experience to judge/understand the general policies
 Be free of convictions in financial matters
• Majority are representatives of sponsoring companies and of plan members or their representatives
• FSMA requires documentation to be provided prior to appointment
• Accounts must close 31 December
Usually limited to 6 to 10 members
37

20 December 2013
Governance and Operational Structure continued…
Country Committee (depending upon SLL of host country)
• Established for individual benefit scheme/country as and when necessary
• A written document is needed to stipulate the powers, functions etc of this committee. These are at the discretion of the parties
involved
• This is not an operational committee of the OFP. It will be part of the Consortium
Representatives from the relevant Countries. Role of committee is for information and consultation. Committee duties must be
established before existing country governing bodies can be wound up
Investment Committee
• Operate under the supervision of the Board of Directors
• Members may also be members of the Board of Directors provided that they represent a minority on the Board
• A written document is needed to stipulate the powers, functions etc of this committee
• Propose investment strategy to the Board and General Assembly
• Select, monitor and evaluate asset managers
• Implement the investment policy
Align with any current Pension Investment Committee. Meet regularly, at least quarterly
Management Committee
• Daily management of the OFP
• The Board of Directors can delegate day-to-day decisions and duties to the committee e.g. sign-off of daily transactions,
preparation of annual report, maintaining documents
Report to the Board of Directors at least quarterly
38

20 December 2013
Providers
The IORP will outsource roles to various providers/experts:
 Accountant: responsible for producing the financial accounts for the IORP on an annual basis
 Compliance officer: responsible for ensuring the IORP complies with the applicable rules and regulations
 External auditor: responsible for verifying the accuracy of the financial accounts of the IORP
 Internal auditor: responsible for verifying processes are put in place in line with the internal control procedures
 Advisers/actuary: advisers should be appointed where the IORP does not have the in-house expertises e.g. executing the plan, selecting
providers. An IORP would typically need a lawyer and an actuary
 Administration provider: responsible for day to day activities of the plan; collects member and contributions data, verifies contributions are in
line with the rules of the plan, ensures contributions are allocated to the appropriate member accounts which in turn are allocated to the
appropriate investment funds, interacts with investment manager(s) to track member fund values and requests for changes to asset
allocation, ensures benefits are paid in line with the rules of the plan, interacts with members – providing benefit statements
 Investment manager(s): responsible for investing and monitoring assets.
 Annuity provider(s): responsible for paying pensions to retired members (if applicable). At retirement, if the member chooses to buy a
pension with their retirement fund, they will need to select an annuity provider. The annuity provider then takes responsibility for paying the
members pension. No further liability remains with the IORP. The insurance company should offer this, but the members should also have
the opportunity to select an alternative provider
 Reinsurance company: to cover the risk benefits. The insurance company should offer this.
39

20 December 2013 40
Asset pooling
IORP
multi-
country
Insurance
Country X
Insurance
Country Y
Insurance
Country Z
Fund A Fund B Fund COther...
• The local insurance contracts should, where appropriate, all have access to the same pool of assets, considering both
local social and labour law and any minimum return guarantees
• The IORP should also have access to these (for consistency), but is not restricted to the funds of the insurer. The
IORP should identify other suitable investments and pool assets across countries and organisations
• Asset pooling ensures that the fund can benefit from economies of scale and improve their governance and
operational efficiency
• Asset pooling will also facilitate transfer to IORP (to be included in insurance agreement at no cost)

20 December 2013 41
Risk pooling
Pooling Network
Insurance
Country X
Insurance
Country Y
Insurance
Country Z
Re-Insurance
IORP
• Risk pooling should be used for insuring risk
benefits e.g. death
• Local organisations will pay risk premiums to
either the IORP or the local insurer. All risks
will then be transferred into a single portfolio,
the “pool”. The premiums will be negotiated
centrally at a more competitive rate than would
be the case locally, as they have bulk buying
power
• In addition, experience losses in
countries/organisations (caused by more
people dying than expected) will be offset
against profits in other countries/organisations
(caused by fewer people dying than expected).
If profits exceed losses a dividend will be paid
to the IORP. If losses exceed profits, there is
no dividend
• Dividends can be retained by the IORP to cover
expenses

20 December 2013 42
3rd pillar pensions
 Individuals without employment contracts will not be able to join the IORP. An IORP can only be used for
providing employer sponsored occupational retirement benefits
– Non contractuals will be able to pay into a 3rd pillar pension plan
 Retirement saving plans should instead be set up with a local insurance company
– Individual insurance contracts with voluntary personal contributions
– Essentially for employees and researchers without employment contracts
– If possible, access should be provided to the RSV asset and risk pooling arrangement
– Make this part of the Master Agreement with the insurance company

Section 5: Conclusion and next steps
 Conclusion
 Project plan for 2014 and expected budget
 Communication strategy
43

20 December 2013
Conclusions
 Concern over saving for adequate retirement benefits has been identified as one of the main barriers to researcher mobility
 Setting up a pan-European retirement savings vehicle will help remove this barrier:
- It is feasible
- It is pertinent, particularly for mobile researchers who are often not covered by local plans
• Employees already having a pension plan in place will also have the opportunity to join the best in class vehicle
 We recommend that the plan is set up as a defined contribution plan with a flat rate contributions structure with possible
death benefit coverage and a third pillar option
 We recommend a consistent design across Europe where possible. Differences should only be introduced where it makes
sense to do so (or is required by law)
 A single pan-European retirement savings vehicle will have access to best in-class providers, asset managers,
etc and enable smaller local organisations to benefit from the economies of scale that come with being part of a
bigger operation
 In order to achieve this the Task Force will need to create a Consortium that can represent member organisations in the
EEA. The Consortium will be a separate legal entity.
 The Consortium will then create the retirement savings vehicle. The vehicle have two sections:
 An IORP, an occupational pension plan that is a separate legal entity. The IORP will be controlled by the Consortium
and will have the flexibility to appoint its preferred providers. Practically, it is not possible to cover all countries using
the IORP from day 1, a phased approach is required.
 An insurance product, to be used by members who cannot join the IORP, either because the savings are 3rd
pillar or
because their country is not yet covered by the IORP. For the latter, benefits will eventually be transferred to the
IORP. The insurer should pool assets, provide an annuity option and be used by the IORP to reinsure death benefits
44

20 December 2013
Next steps: 2014
Summary
Socialise and promote pan-European Retirement Savings Vehicle with organisationsAll
 Preparatory work for
creating the
Consortium
RFP
Task Force
 Define insurance
contract and policy
documents
 Sign Master
Agreement with
insurer
 Agree plan of action
for including new
countries
 Communication with
local HR staff on
implementation
 Select insurance
company
 Preparatory work –
define
recommended
contributions
rates/insured death
benefits
 Consortium
established
 Launch RFP
process for insurer
creating IORP
Consortium
To be confirmedTo be confirmedTo be confirmedTo be confirmedTo be confirmedPreparatory
meetings
To be confirmedTo be confirmedTo be confirmedTo be confirmedRome, 26 MarchFormal Meetings
IORP
Insurance
 IORP open to initial
countries
 Create the IORP
 Insurance open to
initial countries
 Create insurance Insurance company
selected
 RFP process
launched
Q1 2014 Q2 2014 Q3 2014 Q4 2014 2015+
45

20 December 2013
Next steps: 2014
Setting up the IORP
STEP 1: Establish the OFP
 Draft the bylaws
 Have at least one sponsoring employer
 Arrange for the bylaws to be published in the Belgian State Gazette
STEP 2: Compile the request file
 Complete the request file (for at least one country), which will contain drafts of:
- Bylaws
- Pension Plan Rules
- Sponsor Agreement
- Financing Plan
- Statement of Investment Principles
- Internal and External Reporting Procedures
- Business Continuity Policy
- Internal Control Procedures
- Integrity Policy Code of Conduct
- Description of Adminstrative and Accounting
Organisation
- Outsourcing Policy
- Complaint Procedure
- Management Structure
- Country Committee Structure
 Drafts are submitted initially to enable any comments from the FSMA (Belgium regulator) to be incorporated
46

20 December 2013
Next steps: 2014
Setting up the IORP continued…
STEP 3: Apply to the FSMA for authorisation to act as an OFP by submitting the request file
 Upon submission of a complete file the FSMA will respond within 3 months
 The relevant documents can be updated following the initial authorisation, at which point they will need to be re-
submitted to the FSMA. After which authorisation will be received within 3 months (usually less)
STEP 4: Initiate the authorisation and notification process for entering into cross-border activities with the FSMA
 This can be started at the same time as applying for authorisation to act as an OFP
 Upon submission of a complete cross-border file the FSMA will respond within 3 months
 The notification process will be concluded within 2 months from the date authorisation is received
Develop Governance,
Financing and
Investments Structure,
define benefits and
develop administration
processes
Compile request
file
Apply to FSMA for
authorisation
Receive
authorisation from
FSMA
Go-live
Q2 2014 Q3 2014 Q4 2014 2015
47

20 December 2013 48
Next steps: 2014
Communication strategy
Step 2
Create
a strategy
Step 1
Know
people and
culture
Step 3
Produce
and
Implement
Step 4
Measure,
refine,
repeat
An investment will need to be made to develop strong communication material once it has definitively been
decided that the RSV will be created
 Simple, straightforward and easy-to-use
communication
 Clear explanations on complex topics to understand
benefit options and make the right decisions
 Help on how to put the knowledge into action
 Focus on personal needs and working within
Consortium’s benefits brand
 Attractive design, friendly and engaging imagery for
communication material
 Use of all media (print, web, social) to reach the targeted
audiences

20 December 2013 49
Expected cost (INDICATIVE)
One-off implementation costs
 Creating the IORP vehicle : €150,000 - €200,000
 Cross-border notification for each country : €30,000 - €40,000
 Enrolling new organisations / handling transfer of accrued benefits (where/if possible) : €10,000 - €30,000
(assuming that there are no issues with convincing any stakeholders e.g. works councils - if there are then this
cost could potentially rise to say €50,000). Note that in theory it would be necessary to notify the regulator of
cross-border activity as each new organisation is added. We re investigating whether it would be possible to
have notification for each 'plan' rather than each 'organisation‘
 Launching the vehicle (leaflets, posters, member booklets, presentations for each country) - €25,000 - €50,000+
for the first organisation(s) in each country + €5,000 per additional presentation required as new organisations
sign up to it
 Support from Aon Hewitt: €120,000 - €150,000 (setting up Consortium, selecting insurance company)
 Legal advice
Note that:
 These costs are broad estimates. For example, if the Task Force decide to create an 'open IORP' of an
insurance company we cannot predict the provider fees e.g. they may or may not charge for adding new
countries. The above cost is for creating a ‘closed IORP’
 Additional budget may be required for communication material to inform organisations about the project e.g.
brochure, website

20 December 2013 50
Ongoing cost of administration services
Secretarial services: €60,000 to €80,000
Includes organising General Assembly, Board
meetings, Management Committee, Social
Committees (per country), Investment Committee
Annual reporting: €10,000 to €15,000
Compliance officer: €10,000 to €15,000
Internal auditor: €15,000 to €20,000
External auditor: €15,000 to €20,000
Tax declarations, bookkeeping and reporting to
authorities: €20,000 to €30,000
Cost structure of member administration
according to business model of provider
 Fee based annual cost, or
 Loading included in the annual management
charge (AMC pricing): reduction of return on
investment
Estimate in case of fee based annual cost
 Ongoing core services: €100,000 to
€140,000
 Ongoing charges per employer:
– Per capita membership fees of €16 for
active members (and €10 for deferred
members)
– Plan management fee of €2,000 to
€10,000 per organisation to cover
matters such as operation of treasury
and fund accounting and legislative
compliance

20 December 2013 51
Ongoing cost of investment related services
 Investment approaches
– Segregated investment funds: assets invested directly into the market (no investment choice)
– Pooled investment funds: holding "units" in a mutual fund, directly of via a fund platform
 Bundled or unbundled mandates for member and fund administration
 Investment fund administration cost
– Pooled fund pricing: initial charge of 1% on selling / buying
+ AMC for actively managed funds:
• Equity and Global Equity 75 bp
• Bonds 50 bp
• Property 100 bp
• Balanced 75 bp
AMC for passively managed funds: less than 25 bp
– Fund platform pricing: AMC 5 to 20 bp

20 December 2013 52
Expected costs (INDICATIVE)
Summary
Annual ongoing costs:
 First year: € 284,000 = 100,000 + (100 x 3 x 5 x 16) + (3 x 5
x 2,000) + 130,000
 After 10 years: € 608,000 = 100,000 + (100 x 21 x 5 x 16) +
(21 x 5 x 2,000) + 130,000
Total implementation cost after 10 years:
= €5,450,000
= 200,000 + (21 x 40,000) + (5 x 21 x 30,000) +
(21 x 50,000) + (5 x 21 x 2,000)
Assumptions:
 100 members per sponsoring entity
Assumptions:
 3 countries in the first year, increasing by 2 countries each
year (21 countries after 10 years)
 5 sponsoring entities per country
Annual ongoing administration cost (fee basis)
 Core services: € 100,000
 Member cost: € 16 per member
 Management fee: € 2,000 per organisation
 Secretarial services: € 60,000
 Annual reporting: € 10,000
 Compliance officer: € 10,000
 Internal auditor: € 15,000
 External auditor: € 15,000
 General administration: € 20,000
One-off implementation costs
 Create IORP vehicle €200,000
 Cross-border notification €40,000 per country
 Enrolling new organisations: €30,000 per
organisation
 Launching the vehicle €50,000 per country
plus €5,000 per
organisation 130,000

20 December 2013 53
Projection assumptions
 Charging the cost as percentage of member contribution
 Assumptions
– Average member contribution: 4.00% of annual income
– Average annual income: €30,000 p.a.
– Average return on assets: 4.50%
– Fee on contributions: 2.50%
– Fee on assets: 20 bp
 Total annual contribution
– First year: € 1,800,000 = 100 x 3 x 5 x [ 4% x 30,000 ]
– After 10 years: € 12,600,000 = 100 x 21 x 5 x [ 4% x 30,000 ]
 Total management fee = 2.50% x total annual contribution + 0.20% x total assets
– First year: €48,800
– After 10 years: €481,276

20 December 2013 54
10 year projection of costs related to creation of IORP
An initial capital investment will be
required to set up the RSV. It is
expected to become self sufficient
in the future, but when this will
happen will depend in the size of
the invested assets and annual
contributions being invested
⇒

Appendices
 Appendix 1: Selecting an insurance company
 Appendix 2: Example of a mobile researcher
 Appendix 3: Leaflet
 Appendix 4: Design parameters
55

20 December 2013 56
Appendix 1: Selecting an insurance company
 The following slides provide a template of an RFP than can be issued as part of the public procurement
process.
 Sections 1-4 of this pack should also be shared with the providers to ensure they have sufficient
understanding of the project

20 December 2013 57
Request for Proposal material
 The Consortium was created [date] to establish a pan-European Retirement Savings Vehicle (RSV) for professionals employed by research organisations
in the European Economic Area. The current members of the Consortium are summarised in Attachment [X}. We anticipate membership increasing
significantly in the coming years
 The form of this vehicle will be:
1. A closed-IORP to provide retirement and death benefits to individuals covered by employment contracts where the risk of death benefits will be
fully reinsured
2. An insurance arrangement to provide retirement and death benefits to individuals covered by employment contracts in countries which are still
in the process of being included in the IORP
3. An insurance arrangement to provide 3rd pillar retirement benefits to individuals not covered by employment contracts
4. An insurance arrangement to cover disability benefits
 We anticipate that membership will be as follows:
 Members of the IORP and the local insurance arrangements should have access to a pooled asset solution
 Death and disability benefits of the IORP and the local insurance arrangements should be pooled
 Offer a competitive annuity rate for members wishing to purchase a pension at retirement
 Communication materials should all be consistently branded and be available online
 Investment and administration charges should be as competitive as possible so as to encourage membership of new organisations
 We would like to invite you to submit your proposal for helping us. We will set up a closed IORP but in all other aspects will need support.
Specifically, the insurance arrangement and investment and administration services. Over time we intend to transition all employees to the
IORP, where possible. Independent of this, the IORP and the insurance arrangement will need to be aligned.
Name of organisation Expected number of
members
Expected
contributions p.a.
Expected assets
transferred from pre-
existing arrangements
Sum insured Country
Organisation 1
Organisation 2
…
Total

20 December 2013 58
Request for Proposal material continued…
 Please email your complete response to [email address] by [date]. If you have any questions relating to the RFP please submit
these to [email address] in line with the timetable below
 Responses format: Powerpoint
 Given that the RSV will form a critical part of the employee benefit proposition going forward, there are a number of key
objectives that must be satisfied. These include the following:
– Strength of brand and international business capability
– Administration and communication capabilities
– Investment capabilities
– Multinational pooling capabilities
Request for proposal (RFP) issued to suppliers [date]
Confirmation of receipt and intention to bid [date]
Deadline for submitting questions [date]
Deadline for replying to questions [date]
RFP submitted [date]
Invitation to meeting (if successful) [date]
Meetings with short-listed suppliers [date]
Contract negotiations/finalisation (target date) [date]

20 December 2013 59
Company and Team
1. Name of Provider
2. Main contact (name, position, telephone number, email address, office address)
3. Proposed project team (name, position, role within team, relevant experience, location)
i. Will there be a bespoke, dedicated team dealing with the scheme on an ongoing basis?
ii. Will there be a dedicated relationship manager to contact if there is a problem with the service?
iii. How many specialist implementation managers will you employ to help us install/implement the scheme? How long will they
be available for?
Relevant experience
4. Please outline your current experience with multi-country retirement savings products.
5. i. Please provide details of the number of, and countries involved in, multi-country retirement savings products that you have set
up. Please comment on the location of the offices actually involved in these set ups.
ii. Please outline your learning points from work-to-date on multi-country products.
6. Please detail your experience in dealing with multi-location insured DC plans
7. Please explain why you should be selected
Presence
8. i. Please confirm in which countries you have local offices that can provide 2nd
and 3rd
pillar retirement savings products and
which countries you expect to be able to cover in 2 years and 5 years time.
Ii. Please confirm which countries you do not plan to cover in the future.

20 December 2013 60
Communications
9. Please provide details on your member communication capabilities in each country and on a multi-country basis, including:
 Call centres
 Websites for on-line member access
 Benefit statements and fund literature
 Investment choices
 Languages available (call centres and written communication)
10. Please provide examples of standard member communications including:
 Joining pack
 Investment fund factsheets
 Retirement packs
 Annual statements
11. Please provide log in details and password for your demo online site
12. How will you deal with complaints?
13. How can communications be tailored to our brand/message? Please include details on flexibility and costs.
14. Please confirm how you see the retirement process working? Do you have experience linking in with annuity brokers? If so,
which ones?
15. Please provide examples of your centralised reporting capabilities.
Owing to the mobility of Researchers it is desirable to have all communication materials and benefit election forms available on-line. Ideally
communications will be available in the individual's native language.
The Consortium will want to receive regular reports detailing related to membership, administration and investments.

20 December 2013 61
Investments
16. Please provide details on the possible investment choices and any lifestyle and target maturity solutions available. Please
comment on whether you are able to offer funds with guaranteed returns, where necessary.
17. What process is in place to remove underperforming funds from the platform?
18. What are the charges/limits for individual fund switches?
Contract
We would look to agree a single Master Service Agreement with appendices for each country.
19. Minimum contract duration.
20. Please provide details of your expected fee structure, including:
 Implementation costs
 Ongoing costs (split out by fees on contributions, assets, administration, investment)
 Other e.g. transfer fees, termination fees
It is very important that there is full transparency of fees.
21. What are the service standards, monitoring and reporting arrangements? What happens when service targets are breached?
Will you pay compensation if standards are not met?
22. What do you see as the biggest challenges in servicing the scheme? Are there any potential problems that we should be aware
of in the short term and how do you intend to solve them?
Implementation
23. Please provide a proposed implementation timetable, including details of which party would be responsible for each stage

20 December 2013 62
Appendix 2
Example of a mobile researcher
Assumptions
 Researcher works in Italy for 10 years, then in the Netherlands for 30 years
 The researcher retires in Italy
Whilst working in Italy
 Contributions are paid into the Italian section of the pan-European pension fund
 Contributions are tax exempt up to €5,165 p.a.
 The investment returns on assets in the Italian section are taxed at 11% each year (even when non-resident and employed
outside Italy)
Whilst working in the Netherlands
 Contribution are paid into the Dutch section of the pan-European pension fund
 Contributions are tax exempt, provide the Dutch section of the plan is compliant with Dutch tax legislation
 The investment return on assets in Dutch scheme are not taxable prior to retirement
 The investment returns on assets in the Italian section continue to be taxed at 11% each year

20 December 2013 63
Appendix 2
Example of a mobile researcher continued…
On retirement in Italy
 Tax is paid in Italy and the rates applicable to taxable benefits are 15% decreasing to 9% according to the number of years of
service the member has.
 At least 50% of the fund built up in the Italian section must be used to buy a pension. The remainder can be taken as a lump
sum
– Benefits bought using contributions paid, up to the tax deductible limit, into the Italian section of the fund are taxable.
– Benefits bought using contributions paid, in excess of the tax deductible limit, into the Italian section of the fund are
not taxable.
– Benefits bought using the already taxed investment returns are not taxable
 100% of the fund built up in the Dutch section must be used to buy a pension
– 100% of benefit payments from the Dutch section are taxable

20 December 2013 64
Appendix 3: Leaflet

20 December 2013 65
Appendix 3: Leaflet continued…

20 December 2013 66
Appendix 4: Design Parameters
General policy
Gross salaryPensionable salary
Practice to vary by countryBeneficiary in case of
death
In case of death the accrued fund value would be payable to a beneficiary. Where organisations do want to provide
additional death benefits the IORP arranges for these to be reinsured.
Death benefits
The IORP will allow transfer values to be paid, otherwise benefits are deferred to retirement, in accordance with local
country social and labour law
Benefits on leaving
The IORP will apply the maximum benefit levels, as required by local country social and labour lawMaximum benefits
The IORP will need to vary practice by country. For each country the IORP will need to be aware what combination of
benefits is possible so that local rules are complied with.
Pensions should be bought out with an insurer at retirement. We do not suggest that pensions are provided through the
IORP as this would create a defined benefit obligation.
Payment form on
retirement
Independent of the length of their employment contract (which is particularly relevant for mobile employees), vesting of
employee and employer contributions is immediate
Vesting
In general, members should have access to a range of investment options unless local social and labour law requires
minimum investment guarantees. In these cases, investment options should be restricted to ensure the minimum
investment guarantees are met
Investment options
A step-rated contribution structure. For example X% of earnings up to Y plus Z% of earnings in excess of Y. Y will vary by
country and Z and X will vary by organisation
Contributions - design
Different countries and organisations may vary the amount that they contribute and the amount they ask members to
contribute
Contributions - amount
Auto-enrolment should be applied, where possibleEnrolment
Immediate eligibilityEligibility - timing
No restrictions imposed by IORP, but practice may vary by countryEligibility - private sector
No restrictions imposed by IORP, but practice may vary by countryEligibility - public sector

20 December 2013 67
General policy continued…
In many countries Collective Bargaining Agreements (CBA) may exist and these may define minimum terms and conditions
for a pension plan. The pan-European plan will need to comply with these
Terms and conditions
Late retirement is allowed unless not permitted by local social and labour law. The latest age at which members may retire
will vary by country
Late retirement
Early retirement is allowed where possible, as this does not increase the cost to the organisations. The earliest age at which
members may retire will vary by country
Early retirement
Defined as state pension age in all locations. This will not impact member benefits as in locations where there is flexibility in
defining normal retirement age there is also flexibility in defining the early retirement/late retirement age
Normal Retirement Age
Practice to vary by countryBenefits on divorce
Not provided, unless otherwise required by local social and labour lawPayment while in service
Lump sum, unless otherwise required by local social and labour lawBenefits on disability
No minimum or maximum to apply, unless otherwise required by local social and labour lawDeath benefit level
Lump sum, unless otherwise required by local social and labour lawPayment form on death
(pre-retirement)

20 December 2013 68
Country detail: Austria
To be confirmedPensionable salary
List of standard beneficiariesBeneficiary in case of
death
Death benefits
Allow transfer values to be paid, otherwise benefits are deferred to retirementBenefits on leaving
No maximumMaximum benefits
Fund must be used to purchase a pension at retirement
Exceptions:
 100% lump sum for small amounts
Payment form on
retirement
Vesting
No minimum investment option requirementsInvestment options
At discretion of organisationContributions - amount
Auto-enrolmentEnrolment
All employees and/or groups of employees provided not discriminatoryEligibility - private sector
All employees and/or groups of employees provided not discriminatoryEligibility - public sector

20 December 2013 69
Country detail: Austria continued…
Minimum terms and conditions are defined in Collective Bargaining Agreements (CBA)Terms and conditions
Possible - up to age 65Late retirement
Possible – according to State pension rulesEarly retirement
DC balance may be transferred to another arrangementBenefits on divorce
Not allowedPayment while in service
Exceptions:
Benefits on disability
No minimum or maximums applyDeath benefit level
Exceptions:
Payment form on death
(pre-retirement)

20 December 2013 70
Country detail: Belgium
List of standard beneficiaries or possible to have a designated beneficiary, at the choice of the memberBeneficiary in case of
death
Death benefits
Not SLL, but in order to receive tax relief the total benefit (inc. social security pension) must not exceed 80% of salaryMaximum benefits
Fund can be taken as a lump sum or a combination of lump sum and pension, without restrictionPayment form on
retirement
Vesting
Minimum investment guarantees on both employer (3.25%) and employee (3.75%) contributionsInvestment options
Compulsory membership for eligible employeesEnrolment
All employees and/or groups of employeesEligibility - private sector
Public sector employees are covered by a compulsory social security plan. A supplementary plan [cannot] be provided for
these employees
Eligibility - public sector

20 December 2013 71
Country detail: Belgium continued…
Minimum terms and conditions are possibly defined in Collective Bargaining Agreements (CBA)Terms and conditions
Possible – no limitLate retirement
Possible from age 62Early retirement
DC balance may be transferred to another arrangement or kept within the IORPBenefits on divorce
[Fund can be taken as a lump sum or a combination of lump sum and pension, without restriction]Benefits on disability
Fund can be taken as a lump sum or a combination of lump sum and pension, without restrictionPayment form on death
(pre-retirement)

20 December 2013 72
Country detail: Hungary
Designated beneficiary – each member chooses who benefitsBeneficiary in case of
death
Death benefits
Fund can be taken as a lump sum or a combination of lump sum and pension, without restrictionPayment form on
retirement
Vesting
Default investment fund should have limited investment risk (i.e. bond-based)Investment options
At discretion of organisation. Employee contributions are optionalContributions - amount
Employer decides on eligibilityEligibility - private sector
Employer decides on eligibilityEligibility - public sector

20 December 2013 73
Country detail: Hungary continued…
Not possible (?)Late retirement
Possible from age 62 for those who were born in 1951 (will need to verify other ages)Early retirement
State pension ageNormal Retirement Age
No benefits provided on divorce (?)Benefits on divorce
Not providedPayment while in service
Lump sumBenefits on disability
No minimum or maximum to applyDeath benefit level
Lump sumPayment form on death
(pre-retirement)

20 December 2013 74
Country detail: Italy
death
Death benefits
Fund accrued in respect of TFR contributions may be taken as a lump sum subject to certain conditions. Otherwise benefits
are deferred until retirement
Benefits on leaving
Pension and lump sum
 The maximum lump sum is restricted; only 50% of the fund can be received as a lump sum.
Exceptions:
 Fund accrued in respect of TFR contributions may be taken as a lump sum subject to certain conditions.
Payment form on
retirement
Vesting
Local social and labour law requires that, if the fund can accept TFR contributions, the member must be able to select an
investment fund that must be expected, with a high probability, to produce a return at least equal to 1.5% plus 75% of
inflation and must guarantee a return of at least 0%
Investment options
Minimum contributions levels should apply where defined in the CBAContributions - amount
Where the CBA specifies an industrywide fund membership of the RSV will need to be made optionalEnrolment
All employees and/or groups of employeesEligibility - public sector

20 December 2013 75
Country detail: Italy continued…
Possible - up to age 70 (this age will be increased in future following December 2011 changes in retirement law)Late retirement
Not permittedEarly retirement
DC balance may be transferred to another arrangementBenefits on divorce
Part of the fund accrued in respect of TFR contributions may be taken as a lump sum subject to certain conditionsPayment while in service
Immediate lump sumBenefits on disability
Immediate lump sumPayment form on death
(pre-retirement)

20 December 2013 76
Country detail: Netherlands
death
Death benefits
Maximum is 100% of salaryMaximum benefits
Exceptions:
Payment form on
retirement
Vesting
Possible. It is not clear to what extent membership of an industr-ywide pension fund, if applicable, is mandatory or whether it
is possible for the organisation to opt out of it. Members cannot opt out of industry-wide funds on an individual basis.
Eligibility - private sector
Employees in public sector are members in an industry wide pension fund (ABP) which they cannot opt out ofEligibility - public sector

20 December 2013 77
Country detail: Netherlands continued…
Up to age 70Late retirement
About 55Early retirement
State pension age (as defined by employer)Normal Retirement Age
Possible if employee works after retirement agePayment while in service
Usually provided outside of fundBenefits on disability
Maximum is 70% of salaryDeath benefit level
PensionPayment form on death
(pre-retirement)

20 December 2013 78
Country detail: United Kingdom
Trustee discretion having regard to member wishes (otherwise benefit becomes taxable)Beneficiary in case of
death
Death benefits
Not SLL, but in order to receive tax relief the total benefits must not exceed Lifetime AllowanceMaximum benefits
Pension and lump sum
 The maximum lump sum is restricted; only around 25% of the fund can be received as a lump sum
Exceptions:
Payment form on
retirement
Vesting
At discretion of organisation, provided total employer contribution exceeds a minimum % (if plan is being used to satisfy
auto-enrolment requirements)
Not SLL, but in order to avoid incurring additional tax charges total new accrual in any year must not exceed Annual
Allowance
Contributions - amount
Possible, but organisation may be required to provide continued membership of a public sector DB scheme (or its own DB
scheme with broadly similar benefits)
Eligibility - public sector

20 December 2013 79
Country detail: United Kingdom continued…
Minimum terms and conditions may be defined in Collective Bargaining Agreements (CBA)Terms and conditions
Possible – no limit (although tax treatment changed post age 75)Late retirement
Possible from age 55Early retirement
Usually provided outside of fundBenefits on disability
Fund can be taken as a lump sum or a combination of lump sum and pension, without restrictionPayment form on death
(pre-retirement)

20 December 2013
Definitions
The Belgium regulatorFSMA
The country of domicile of the SRF. It is where the institution is regulated i.e. Belgium.Home country
The country in which the employees are located e.g. UK. Its national social and labour law regulate the
pension benefits provided
Host country
A qualified employee or a contractual agent of an institution whose primary activity shall include research; by
way of demonstration, but not limitation, this would be an administrator, engineer, scientist or technician
Professionals
European Economic Area, the EU member states, except Croatia, plus Iceland, Liechtenstein and NorwayEEA
European Research Area, including 42 countries in total:
 MEMBER STATES: The EU-28
 ASSOCIATED COUNTRIES: With science and technology cooperation agreements that involved
contributing to the framework programme budget
 CANDIDATE COUNTRIES – currently recognised as candidates for future accession
 THIRD COUNTRIES - the participation of organisations or individuals established in countries that are not
Member States, candidates or associated should also be justified in terms of the enhanced contribution to
the objectives of FP7
ERA
Institutions for Occupational Retirement Provision; includes (almost) all legally-separate pension arrangements
in the EEA
IORP
Retirement Savings VehicleRSV
Social and Labour LawSLL
European Union, including 28 member states in totalEU
80

20 December 2013 81
Contact List
Thierry Verkest
International Retirement and Investment
+32 (0)2 730 99 03
thierry.verkest@aonhewitt.com
Jacqueline Wills
International Retirement and Investment
+44 (0)207 086 9374
jacqueline.wills@aonhewitt.com

20 December 2013 82
Copyright © 2013 Aon Hewitt Limited. All rights reserved.
Aon Hewitt Limited, 8 Devonshire Square London EC2M 4PL
Registered in England & Wales No. 4396810
To protect the confidential and proprietary information included in this material, it may not be
disclosed or provided to any third parties without the prior written consent of Aon Hewitt Limited.
Aon Hewitt Limited does not accept or assume any responsibility for any consequences arising
from any person, other than the intended recipient, using or relying on this material.
Authorised and regulated by the Financial Conduct Authority.

83
MEMBERS OF THE TASK FORCE
Paul Jankowitsch, Chair Person Technical University of Vienna
Théodore Economou, Secretary European Organization for Nuclear
Research (CERN)
Johan Huysse Vereniging van Universiteiten (VSNU)
Andrea Crivelli Elettra Sincrotrone Trieste
Cristina Garettini Elettra Sincrotrone Trieste
Olivia Angioni Consiglio Nazionale delle Ricerche
(CNR)
Paola Ceripa Consiglio Nazionale delle Ricerche
(CNR)
Gabriella Kemény Central European University
Catherine Soltane EFDA-JET, EIROforum
Indi Seehra University of Cambridge
Wendy Sonneveld Ghent University
OBSERVERS OF THE TASK FORCE
Lidia Borell-Damian European University Association (EUA)
Thomas Estermann European University Association (EUA)
Katrien Maes League of European Research
Universities (LERU)
ADVISERS
Thierry Verkest Aon Hewitt
Jacqueline Wills Aon Hewitt

85
TASK FORCE FOR THE ESTABLISHMENT OF A PAN-EUROPEAN
RETIREMENT SAVINGS VEHICLE FOR RESEARCH PROFESSIONALS.
TERMS OF REFERENCE
23 April 2013
1. AIMS
A Task Force has been created to prepare a proposal on the establishment of a pan-
European Retirement Savings Vehicle (“RSV”) ") for Professionals employed by
research organisations. The Task Force will report its findings and recommendations
by 31 December 2013 to the appropriate decision-making body within each respective
organisation.
The purpose of the RSV would be to facilitate the removal of one of the barriers to the
mobility of Professionals, by providing them with retirement benefits in addition to
any state retirement benefits (1st
pillar benefits).
2. OBSERVATIONS
Different countries provide different levels of 1st pillar benefits and this may act as a
disincentive for mobility of research Professionals (as defined below). This shall be
taken into consideration in the design of the benefit structure of the RSV and the
standard level of contributions for each jurisdiction.
The RSV would be used to ensure continuity of the accumulation of pension benefits
as professionals move to different organisations and to different countries. This
objective could only be met if a critical mass is achieved, in terms of the number of
countries, participating organisations and members. It could be addressed in two
stages: attaining the critical mass of contributions necessary to pursue an insurance
solution and/or the subsequent establishment of an IORP.
The Task Force would implement this by identifying which organisations in which
countries could be expected to sponsor the RSV. Estimates of the number of expected
members and assets should also be made.

86
The Task Force shall also identify any hurdles that exist due to local regulations
and/or not being able to transfer existing arrangements. Organisations targeted shall
include those in the public and private sectors, both those who currently participate in
an arrangement, and those who do not.
It is considered that the RSV should be used for providing retirement benefits
(together with) death and disability benefits if these are deemed appropriate).
The Task Force was first established on 23 April 2013.
3. BACKGROUND
In 2009 the European Commission engaged Aon Hewitt to prepare a "Feasibility
study of a pan-European pension fund for EU researchers". The objective of this study
was to report on the legal, technical and financial terms and requirements that should
be considered for setting up a viable pan-European framework of occupational
pension arrangements that could best match EU researchers' needs.
Preliminary findings were presented to the ERA Steering Group on Human Resources
and Mobility, who help to oversee the implementation of the ERA Initiative on a
"European Partnership for Researchers".
In 2011 the European Commission launched a three year project (2011-2013) that will
promote the provision of supplementary pensions to mobile researchers. The
European Commission has a facilitating role and provides on-going support and
advice to organisations that employ researchers in the European Economic Area.
The first year (2011) focused on providing information to employers on the
administrative, legal and financial requirements for setting up a RSV. Three specific
information meetings were held in Brussels with interested employers and stakeholder
organisations. An additional meeting which brought together pension providers was
held the same year.
The second year (2012) was dedicated to mobilising interested parties to build a
critical mass of participating organisations. It included four workshops that examined
in more depth the regulatory environment and helped employers to fully understand
the costs and benefits of setting up a pension fund. These workshops were held in
different Member States.
The third and final year (2013) of the project will be dedicated to establishing a RSV
for researchers.
Initially, the retirement savings vehicle would:

Report by the Task Force for the Establishment of a pan-European Retirement Savings Vehicle for Research Professionals

Report by the Task Force for the Establishment of a pan-European Retirement Savings Vehicle for Research Professionals

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