Nicolas JeanmartHead of Macro-Economics,

Life & Pensions, INSURANCE(BELGIUM)

Friday, 27.9.2013

Securing the future of pensions: The growing importance of supplementary pension funds

15th Hydra conference 26 – 28 September2013

Insurance Europe

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Who?

What?

Why?

European insurance and reinsurance federation, founded in 1953

Represents around 95% of European insurance market by premium income

Committed to creation of favourable regulatory and supervisory framework for insurers at European and international level.

Members

34 national associations

27 EU member states

5 non-EU marketsSwitzerland, Iceland, Norway, Turkey, Liechtenstein

2 associate membersSerbia, San Marino

3 partnersRussia, Ukraine, Kosovo

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Contribution to the economy

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Insurance Europe represents more than 5 000 European (re)insurers, which:

generate premium income of more than €1 100bn

employ almost one million people

invest almost €8 400bn in the economy

Publications

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Funding the future: insurers’ role as institutional investors

How insurance works

European Insurancein Figures

Annual Report The impact of insurance fraud

Indirect taxation on insurance contracts in Europe

What is on our agenda?

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Omnibus II Solvency II

Pensions IORP review

IAIS ComFrame Anti-discrimination

Stability issues SIFIs Data protection Financial

conglomeratesADR

Collective redress

Accounting EMIR FTT Savings tax FATCA

Climate changeNatural

catastrophes

PRIPs IMD MiFID

Anti-money laundering

Credit rating agencies

ELDOffshore oil safety

IntroductionPensions - overarching objectives:

Guaranteeing the adequacy of pensions benefits Guaranteeing the sustainability of national pensions systems

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Pensions’ adequacy

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Pension systems in Europe : adequacy of pension revenue

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Data Source : OECD Pensions at a glance 2011

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Longer life expectancy and falling birth rates: How to address the problem of under-provision in retirement?

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

Total EU annual pension gap for individuals retiring 2011-2051

Source: Aviva

According to a study, across the EU, the annual pensions gap stands at €1 900bn (or 19% of 2010 GDP).

The most affected countries would be the UK (€12 300 per capita each year) and Germany (€11 600/cap.)

This analysis also reveals that no single reform can close the gap completely on its own; non pension-assets may only fill as little as 20% of the pensions gap.

(Source: Aviva)

Pension systems in Europe : adequacy of pension revenue

Pensions’ sustainability

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Pension systems in Europe : Sustainability

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Data Source : OECD Pensions at a glance 2012

Multi-Pillar systems are the solutionNo pillar on its own can respond to the challenges of the coming decades

Multiple pillar systems allow for better distribution of the risks (demographic vs economic)

Possible to distinguish between the goals of poverty reduction and income replacement

Pension reforms decreasing first pillar pension pay-outs could be countered by additional supplementary retirement income

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Finding the right balance

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Pensions systems in Europe : three pillars

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IT FR ES SE DE NL UK0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Distribution between the different pillars

Pillar 3Pillar 2Pillar 1

Data Source : Insurance Europe

Supplementary pension schemes

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DE UK NL ES FR IT SE0

20,000

40,000

60,000

80,000

100,000

120,000

Supplementary pensions in absolute numbers

Pillar 3Pillar 2

Bene

fits

paid

in €

m

Data Source : Insurance Europe

Second pillar across Europe

18Data Source : Insurance Europe

Supplementary pensions : EU regulatory developments

Review of the IORP Directive: level playing field between the different occupational pension providersSame risks, same rules

Workstreams on personal pension products (PPPs)Is their a need for a single market for PPPs?European Commission (EC) aims for enhanced consumer protection

Insurance Europe is strongly engaged in discussions on possible regulatory pension changes with EIOPA and the EC

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For more information

www.insuranceeurope.eu