April 11, 2014

About APFA …

About APFA

Pension Fund for civil servants and employees of government related entities

Two pension plans

• NPR 2005

• NPR 2011

10,000+ participants

APFA team: 36

APFA’s History Algemeen Pensioenfonds Nederlandse Antillen

(APNA) / PVL Before 1986 – Auxiliary Branch APNA 1986 – Algemeen Pensioenfonds sui generis 2005 – Stichting Algemeen Pensioenfonds – Nieuw Pensioenreglement 2005 2011 – Nieuw Pensioenreglement 2011 – Supervision Central Bank of Aruba

APFA’s History

Supervision Central Bank of Aruba

State Ordinance for Company Pension Funds

Capital Funding System

Maximum actuarial interest rate 4%

Recovery Plan

APFA’s Participants

62%

3%

35%

Actieven

Premievrijen

Pensioengerechtigden

2013

Active participants

Inactive participants

Retired persons

APFA’s Participants

Y/E 2013 NPR 2011 NPR 2005

Active participants 6,248 298

Retired persons 3,766 2

Inactive participants (sleepers)

297 14

Average age active participants

44 43

APFA’s Pension Plans

NPR 2005 and NPR 2011

Average pay plan (PVL: final pay plan) Indexation (conditional) (PVL: DT) Pension Age: 60 years (PVL: 55 years) NPR 2011: transitional measures Pension Accrual: 2.15% (PVL: 2.34%) Franchise: Afl. 14,059 (PVL: 0)

APFA’s Financial Position

Y/E 2013 NPR 2011 NPR 2005 Invested Capital (Afl, x thd) 2,174,180 7,707 Pension Provision (Afl, x thd) 2,621,751 6,795

Funding Ratio (Net) 77.5% 106.0% Fundig Ratio (Gross) 82.9% 113.4%

Cost Effective Contribution 23.7% 17.4% Recovery Premium 12.4% n.a. Actual Premium 36.1% 17.4%

Premiums NPR 2011

4%

32.1%

2013 Werknemersbijdrage

Werkgeversbijdrage

28,1% Cost Effective Contribution:

23.7%

Recovery Premium:

12.4%

Employee contribution

Employer contribution

APFA’s Financial Position Y/E 2007 Y/E 2008 Y/E 2009 Y/E 2010 Y/E 2011 Y/E 2012 Y/E 2013

Gross FR 97.8% 68.0% 73.9% 81.0% 76.5% 80.1% 82.9%

Net FR 70.6% 76.0% 77.5%

65%

70%

75%

80%

85%

90%

95%

100%

2007 2008 2009 2010 2011 2012 2013

Gross Funding Ratio Net Funding Ratio

APFA’s Financial Position

What happened?

Financial Crisis 2008 Actuarial Interest Rate

Aging Population

GFR 10%

APFA’s Financial Position

What happened?

Financial Crisis 2008 Actuarial Interest Rate

Aging Population

7% 5.5% 4%

APFA’s Financial Position

What happened?

Financial Crisis 2008 Actuarial Interest Rate

Aging Population

GFR 16%

APFA’s Financial Position

What happened?

Financial Crisis 2008 Actuarial Interest Rate

Aging Population

GFR 4%

January 1, 2011 Net Funding Ratio

NPR 2011

72.5%

Recovery Plan

NPR 2011

Recovery Plan NPR 2011

1. Recovery period 15 years 2. Premiums Pension- & Financing

Agreement December 31, 2010: a. Cost Effective Contribution b. Recovery Premium

3. Execution Agreement July 20, 2012: a. Additional Recovery Premium b. Guarantee to recover according to

Critical Recovery Path

33.1%

3%

Critical Recovery Path NPR 2011 Expected development Funding Ratio

(as per December 31st)

Critical Recovery Path NPR 2011

70%

71%

72%

73%

74%

75%

76%

77%

78%

Jan-11 Dec-11 Dec-12 Mrt-13 Jun-13 Sep-13 Dec-13

Net Funding Ratio Critical Recovery path

77.5%

76.3%

Recovery Plan NPR 2011

● Uncertainty guarantee payments – Total Costs of Recovery – Longevity Risk – Actuarial Interest Rate

● Loss of purchasing power

Distribution guarantee payments

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2013 2015 2017 2019 2021 2023 2025 2027

75%-95%

50%-75%

25%-50%

5%-25%

Gemiddelde

Maximum

Recovery Plan NPR 2011

● Uncertainty guarantee payments – Total Costs of Recovery – Longevity Risk – Actuarial Interest Rate

● Loss of purchasing power

Longevity Risk

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2013 2015 2017 2019 2021 2023 2025 2027

75%-95%

50%-75%

25%-50%

5%-25%

Gemiddelde

Maximum

Recovery Plan NPR 2011

● Uncertainty guarantee payments – Total Costs of Recovery – Longevity Risk – Actuarial Interest Rate

● Loss of purchasing power

Actuarial Interest

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2013 2015 2017 2019 2021 2023 2025 2027

75%-95%

50%-75%

25%-50%

5%-25%

Gemiddelde

Maximum

Rekenrente 3,5% / 5,0%

Recovery Plan NPR 2011

● Uncertainty guarantee payments – Total Costs of Recovery – Longevity Risk – Actuarial Interest Rate

● Loss of purchasing power

Loss of purchasing power

0%

20%

40%

60%

80%

100%

120%

2013 2015 2017 2019 2021 2023 2025 2027

75%-95%

50%-75%

25%-50%

5%-25%

Gemiddelde

Pensioenresultaat

Increase Pension Age

General Old Age Pension (AOV)

Increase Pension Age AOV

Consequences for APFA’s participants

Pension Age = Pension Age AOV

Transitional measures

Gap Pension APFA – AOV

Continuation payment AOV premiums

Adjustment of APFA’s Pension Age

● Value accumulated pension decreases

● Additional recovery NPR 2011

● No Gap Pension APFA – AOV

● Lower recovery costs

● Additional years to accrue pension

Additional pension accrual

Adjustment of APFA’s Pension Age

● Recovery projections – Scenario 1: Current Recovery Plan – Scenario 2: Increase Pension Age NPR

2011

Recovery projection

80

90

100

110

120

130

140

150

70%

75%

80%

85%

90%

95%

100%

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Mill

ions

Funding Ratio Recovery path Funding Ratio Pension age increaseTotal costs Recovery path Total costs Pension age increase

Lessons Learned

● Clear and unambiguous agreements ● Involvement of all parties ● Seek support of specialists ● Fix issues in good times & anticipate ● Pensions = dynamics

Constant Open Discussion and Communication

Thank you