New York, 23 June 2011

Pan European Pension Funds, Now A RealityBelgian Economic Mission

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Agenda

I. Opening Remarks Bob Kelly, Chairman and CEO BNY Mellon

H.E. Steven Vanackere, Deputy Prime Minister and Minister of Foreign Affairs and Institutional Reforms

II. SpeakersPhilip Neyt, Chairman Belgian Pension Fund Association

Convergence in European Pension Markets

Jean Paul Servais, Chairman Financial Services and Markets Authority (FSMA)

The Framework of Belgium’s New Dedicated Pan European Pension Vehicle

Leonardo Sforza, Head Research Europe and EU Affairs, Aon Hewitt

From Legislative Change to Business Practice: What Companies Can Gain

Henk Becquaert, Member of the Board of Directors FSMA

Thierry Verkest, Executive Director, Belgium and Luxembourg, Aon Hewitt

Case Studies

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Opening Remarks

Bob KellyChairman and CEO BNY Mellon

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Opening Remarks

H.E. Steven VanackereDeputy Prime Minister and Minister of Foreign Affairs and Institutional

Reforms

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Convergence in European Pension MarketsWhat are the main drivers to merge pension funds into a single Pan European Pension Fund?

Philip Neyt, Chairman Belgian Pension Fund Association

PRESSURE ON EU PENSION SYSTEMS

EU Citizens’ feelings about future pensions (Eurobarometer 2010)

Lower pension benefits

Save more

27%

26%20%Retire later

73%

27%

Pension will change

Pension will not change

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PRESSURE ON EU PENSION SYSTEMS

EU Citizens’ feelings about future pensions (Eurobarometer 2010)

53%47% Fairly or very worried

of pension income

Pension wil be adequate

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PRESSURE ON EU PENSION SYSTEMS

ADEQUACY OF STATE PENSIONS= average state pension compared to average wage

AFFORDABILITY AND SUSTAINABILITY OF STATE PENSION= difference life expectancy and average exit age from labor market

OCCUPATIONAL PENSIONS: CLOSING THE GAP?= Assets/Liabilities ratio

Need of occupational pensions

Work longer, Later/flexible Retirement

More grip on pension (funding) risk (f.ex.Pan-European pension fund ….)

Annual Growth Rate (Liabilities-Assets)

2000-2010: 3%

EU =

17 Yrs

EU =

42%

Remedies

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Pension risk at the corporate agenda

“Since 2009 pensions belong to the top 10 concerns of CFO’s” (CFO.com)

“Deficit in US States’ employee retirement funds grows to $ 1.3 trillion of 11.000 $ for each American” (Pew Center, 4/2011)

“FTSE 350 companies face a pension deficit of £177 bn or 78% of their earnings” (Hymans & Robertson, 3/2010)

“One third of FTSE100 companies can now not pay off deficits in any realistic timeframe from discretionary cash flow” (KPMG, 2010)

“A pension promise can be easy to make but expensive to keep. The immediate cash cost is only part of the problem; the longer-term calculation also involves the value of future pension promises. (The Economist, 4/2011)”

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Multinational Pension Asset Pooling

Company MNCUK Pension Plans

Company MNCGerman Pension Plans

Company MNCFrench Pension Plans

Company MNCGerman Pension Fund

Company MNCFrench Pension Fund

Manager A Manager B Manager C

Investments

Company MNCUK Pension Fund

Pooled Asset Vehicle

Single Pension Fund Entity

Multinational Pension Fund Pooling

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What drives a multinational to pool their pension funds?

Reduced operational Risks(More grip and control)

Simplified & centralized oversight

Enhanced risk assessment, consistent risk mitigation

Integrated global pension risk control

Unified governance

Consistent, central reporting/control

Efficiency gains(economies of scale)

Uniformity facilitates workforce mobility

Pooling of “know how” (deeper expertise)

Leaner admin and fewer providers and interfaces

Eases m&a transactions

Cost savings(single European Entity)

Funding flexibility / predictable funding

Tax optimization

Lower regulatory burden (single supervisor)

Solidarity between subsidiaries or ring-fencing

Better cost transparency and lower operating costs

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The Framework of Belgium’s New Dedicated Pan European Pension Vehicle

Jean Paul Servais, Chairman Financial Services and Markets Authority (FSMA)

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From Legislative Change to Business Practice: What Companies Can Gain

Leonardo Sforza, Head Research Europe and EU Affairs, Aon Hewitt

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Case Studies

Henk Becquaert, Member of the Board of Directors FSMAThierry Verkest, Executive Director, Belgium and Luxembourg, Aon

Hewitt

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