1) Fernando Jaime presented on securing the future of pensions and the growing importance of supplementary pension funds. Greece's population is aging rapidly and will put pressure on public finances and entitlement programs. This emphasizes the need to shift towards mandatory or voluntary funded pension savings through individual pensions or occupational pensions. 2) Insurance companies can play an important role by providing bundled pension solutions including asset management, life cycle investment strategies, and annuitization during payout to protect against longevity risk. A gradual transition is recommended, starting with voluntary contributions and lower contribution rates to establish supplementary pension funds.

1. Fernando Jaime
Vice President,
Global Pensions Products, METLIFE
(U.S.A.)
Friday, 27.9.2013

2. Fernando Jaime
Vice President
Global Employee Benefits – Pensions
Hellenic Association of Insurance Companies, Hydra Meeting
September 2013
Securing the Future of Pensions -
The Growing Importance of Supplementary Pension Funds
MetLife Alico Life Insurance Company Societe Anonyme

3. 2
Greece’s Aging Population 2010 - 2050
1) U.S. Census Bureau, “International Programs - Population Pyramid Graph” <http://www.census.gov/population/international/data/> - accessed on June 17, 2013
Greece 2010
100+
95-99
90-94
85-89
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
Population
Over 65
Working Age
Population
Greece Population by Age Group & Gender (In Thousands)
Age Dependency Ratio at 29%
1 to 3.4

4. Age Dependency Ratio at 59%
1 to 1.7
Age Dependency Ratio at 29%
1 to 3.4
Greece 2050
100+
95-99
90-94
85-89
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
Greece 2010
100+
95-99
90-94
85-89
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
3
Greece’s Aging Population 2010 - 2050
1) U.S. Census Bureau, “International Programs - Population Pyramid Graph” <http://www.census.gov/population/international/data/> - accessed on June 17, 2013
Population
Over 65
Working Age
Population
Greece Population by Age Group & Gender (In Thousands)

5. 4
Implications of an Aging Population
Demographic Drivers
Increasing Longevity Decreasing Birth Rates
Governments must address unsustainable entitlement programs
Pensions Long-Term Care Health Care Unemployment Benefits
Greece 2010
100+
95-99
90-94
85-89
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
Greece 2050
100+
95-99
90-94
85-89
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
Age Dependency Ratio at 29%
1 to 3.4
Age Dependency Ratio at 59%
1 to 1.7
1) U.S. Census Bureau, “International Programs - Population Pyramid Graph” <http://www.census.gov/population/international/data/> - accessed on June 17, 2013

6. 5
Pressure on Public Finances
1st Pillar
State, Mandatory
What Options Do Governments Have?
• Raise Taxes
• Raise Retirement Ages
• Decrease Entitlement Benefits
• Shift Towards Mandatory or Voluntary Funded Pension Savings
– Individual Pensions
– Occupational Pensions
2nd Pillar
Private, Mandatory
3rd Pillar
Private, Voluntary
– 2nd or 3rd Pillar System

7. 6
What System is Best?
There is no single best pensions system for all countries1
• Countries have Established Structures for addressing goals
• Economic Constraints impact administrative capabilities
• Political Processes affect what is politically feasible
• Policy Makers attach different relative weights to their objectives
• History influences politics and the overall propensity for change
1) Adapted from Barr, Nicholas and Diamond, Peter, “Pension Reform in China: Issues, Options and Recommendations” - February 2010
Trend of transitioning away from a heavy reliance on PAYG systems in favor of
Multi-Pillar Frameworks with a Funded Element

8. 7
Comparison of Funded Pensions
1) OECD, “Pension Markets in Focus: Global Pension Statistics” - September 2012
Funded Pensions AUM Relative to Economy Size (as % of GDP, 2011)1
 Netherlands
at 138.2%
United States
at 70.5%
Chile
at 58.5%
Greece
at 0.0%

9. 8
Structural Overview - Netherlands (Quasi-Mandatory)1
 Funded voluntary
occupational system
 Participation is
generally not
mandatory
 Administered by a
Pension Fund or
Insurance Company
 Highly developed
occupational
schemes
 Collective risk
sharing
 Transferable value
 Operates
independently from
sponsor
 “Soft promise”
benefits
 Benefits adjusted
with life expectancy
 Funded Pension
Assets at 138% of
GDP (2011)2
 Net Replacement
Rate at 103% (2011)3
Structure Capabilities
Reforms
Potential - Recent
1) Adapted from the Dutch Pension Fund Organization, “The Dutch Pension System: An Overview of the Key Aspects” - October 2010
2) OECD, “Pension Markets In Focus: Table of Pension Fund’s Total Investment by Country” - September 2012
3) OECD, “Pensions at a Glance 2011: Retirement - Income Systems in OECD and G20 Counties” - 2011 (Net Replacement Rate respective to median earner)
Level of Success

10. 9
Structural Overview - U.S. 401(k) (Voluntary)1
 Funded voluntary
occupational system
 For employees at
qualified companies
 Tax-deferred with
matching
 Multiple regulatory
agencies
 Portability between
employers
 “Catch-Up”
Contributions
 Range of investment
options
 Lifecycle Funds
Structure Capabilities
Reforms
Potential - Recent
 Auto-Enrollment
 Fee disclosures
 Default investment
options
 Funded Pension
Assets at 71% of
GDP (2011)2
 Net Replacement
Rate at 53% (2011)3
1) Adapted from ING Global Retirement Services, “Country Pension Models Around The World” - 2006
2) OECD, “Pension Markets In Focus: Table of Pension Fund’s Total Investment by Country” - September 2012
3) OECD, “Pensions at a Glance 2011: Retirement - Income Systems in OECD and G20 Counties” - 2011 (Net Replacement Rate respective to median earner)
Level of Success

11. 10
Structural Overview - Chile (Mandatory)1
1) Adapted from ING Global Retirement Services, “Country Pension Models Around The World” - 2006
2) OECD, “Pension Markets In Focus: Table of Pension Fund’s Total Investment by Country” - September 2012
3) OECD, “Pensions at a Glance 2011: Retirement - Income Systems in OECD and G20 Counties” - 2011 (Net Replacement Rate respective to median earner)
Structure Capabilities
Reforms
Potential - Recent
 Funded mandatory
individual system
 Replaced public
PAYG system
 Providers (AFPs)
compete on price,
service, and
performance
 Freedom & flexibility
 Diversified
investment options
 Benefits based on
contributions and
fund yields
 Retirement and
disability coverage
 Increase investment
options
 Mandatory
contributions for
self-employed
 Funded Pension
Assets at 59% of
GDP (2011)2
 Net Replacement
Rate at 66% (2011)3
Level of Success

12. 11
Transition from Pay-As-You-Go to Funded Systems
• Gradual Transition
• Voluntary Contributions
• Limited Participation
• Lower Contribution %
• Partial Adequacy
Coverage
• Blended Financing
(e.g. Taxes and External
Capital)
• Immediate Transition
• Mandatory Contributions
• 100% Participation
• Higher Contribution %
• Fixed Adequacy
Coverage
• Tax or Debt Issuance
Financing
Aggressive Transition Moderated Transition

13. • Full service & bundled solutions
• Single business partner with
longstanding experience
• Professional asset management
• Diversified low-cost institutional
investment options
• Life cycle investment strategies • Risk adjusted asset allocations
• Annuitization during payout phase • Protects against longevity risk
• Established distribution and sales channels • Extensive sales network coverage
• Sales and employee enrollment campaigns • Supports plan setup and participation
• Communication and education for
associations, employers, and employees
• Promotes financial literacy and
convenient account access
12
Role of Insurance Companies1
1) Adapted from the OECD, “OECD Pensions Outlook 2012” - 2012
Meaningful BenefitsServices Provided

14. 13
Pension Design Considerations
Mandatory Funded Scheme -
Sponsored at Employer Level
Defined Contribution (DC)
Ring-Fenced Pension Assets
Contribution Rate Achieving
Adequate Replacement Benefit
Benefits Paid as Programmed
Withdrawals and / or Annuities
Tax-Based Incentives
Existing Insurance
Company Licenses
Extended into New Roles

15. 14
This material does not constitute legal or tax advice. For such advice please consult with your own legal and tax advisors.
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