Humaniste Finance and Pension Funds

1. 16th Nov,
2017
The Global Participation Finance Summit, Istanbul
Humanist Finance and Pension Funds

2. You can be young without money but
you can’t be old without it
Tennessee Williams, an American playwright
A
thought

3. “There are more many people living longer and
there are not enough people coming up behind
them to support today’s system”
2017 Global Retirement Index by Natixis Asset Management
An
Afterthought

4. People around the
world have largely
positive word
associations with
retirement
The traditional view of
retirement, where people
stop working altogether at a
defined point in time, is
fading as people’s
relationship with work and
leisure evolves.
The majority of people (72
%) associate positive
words with retirement -
Excitement (8%)
Poverty (13%)
Opportunity (19%)
Enjoyment (31%)
Freedom (41%)
Leisure (46%)
India (20%)
Hungary
(30%)
Germany
(33%)
USA (43%)
China (52%)
Netherlands
(62%)
Highest inWords associated with retirement
Source: Sixth annual Aegon Retirement Readiness Survey

5. The Best Performers in 2017 Global Retirement Index &
Perspectives
New Zealand
(5)
Sweden (4)
Iceland (3)
Switzerland
(2)
Norway (1)
Source: Natixis Asset Management
Older populations forcing new thinking on policy
Longer lifespans Larger liabilities - increased
lifespans of members and the economic pressure of
low interest rates have increased liabilities and
created a pension gap, or funding shortfall
Realizing the responsibility - individual
investors believe that the responsibility
for retirement funding is increasingly
theirs
Older but wiser - Achieving long-term
retirement security will mean being
resourceful

6. Findings from an HSBC Global survey
50% - Low interest
rates mean they will
need to work for longer
66% - Levels of
national debt mean
there will be less
support for the elderly
77% - Retirees will
have to spend more on
healthcare costs in the
future
34% - They will be
financially comfortable
in retirement, based on
how their retirement
saving is progressing
58% - They will
continue working to
some extent in
retirement
47% - Property offers
the best returns for
retirement saving
10% say Millennials are
in best position for a
comfortable retirement,
compared to 42% who
think Baby Boomers are
26 - average age
Millennials started saving
for retirement
59 - average age
Millennials expect to
retire
58% say Millennials are
paying for the economic
consequences of
previous generations
47% - New technology
makes saving for
retirement easier
55% - New technology
will help give future
retirees a better standard
of living
Source: HSBC

7. Following are the factors affecting retirement
plans of people around the world
Ageing
population
Rising
healthcare
costs
Long term
low interest
rates
Impact on people
People are making sacrifices
Exploring new sources of funding
Adjusting their retirement expectations
Some key Interpretations from Retirement Surveys
Innovations in
Pension Plans

8. Total pension fund asset in GCC by 2020 is estimated to be $602.4b and the figure
may reach $938.6b by 2025
Pension funds have the mandate to invest in the local stock markets and they
currently contribute about 5 per cent of the market cap.
Saudi Arabia has the highest exposure to the stock market followed by Kuwait and
Qatar. They serve as anchor investors with a long-term investment horizon,
thereby providing support in times of crisis and reducing volatility.
Pension funds, being one of the largest investor classes, are an important force for
the stability and growth of GCC markets.
GCC Scenario – Pension Funds Market
Source: Marmore Mena Intelligence

9. State DB Plans exist (as of 2016 AUM $400 bn) in Middle East region - E&Y
report
Voluntary DC plans embraced by enlightened employers
Regulatory reforms mandating DC plans will help investments in local capital
markets
Options available include National Provident Fund like in Singapore, HK,
Malaysia etc, alternatively the Turkish Pension model of having dedicated
licensed low cost schemes
Pension initiatives and market reforms

10. Available choices and options
(Defined Contribution plan)
Post employment
benefit
Defined
Contribution plan
Provident Fund
Insured Plan
Defined Benefit
plan
Gratuity
Pension
Investment risk is to be borne by
employee and not the enterprise
Contribution rate is fixed, but the
retirement benefit is variable
Employer’s annual contribution
to the pension is specified
Contributions will be invested
during the employee’s working
career
Pension amount will
depend on level of yearly
contributions and on
investment return earned
on the contributions
Employees who anticipate
changing jobs several
times in their careers
prefer these plans
because accumulated
amounts are usually
easily cashed out or rolled
over to a new employer’s
plan

11. Defined Contribution plan
at a Glance : Global Market and Asset allocation
options
During the last 10 years, DC assets
have grown at a rate of 5.6% pa
DC assets represent 48.4% of total
P7 pension assets, in line with the
established trend towards the
growing dominance of DC plans
DC plans - Asset managers and
institutions could invest in SRI
funds
SRI
funds
DC
Plans
Other
funds

12. According to the US SIF Foundation, Asset managers and institutions
invested $8.72 trillion based on SRI principles in 2016 and there are
more SRI choices for investors — about 1,000 mutual funds and
other investment vehicles in 2016, up from 894 in 2014
This type of investing grew 33% between 2014 and 2016, according
to a recent Morgan Stanley report.
According to TIAA, SRI indexes can offer similar returns to broad
market benchmarks like the Standard & Poor’s 500 index, without
additional risk
Socially Responsible Investing (SRI)
Source: www.whitechurchfc.co.uk

13. Concluding remarks
Reform is an art of the
possible
Ageing is inevitable and so is Retirement
Can we plan post retirement life better ?
Market will offer products to accept risk and
offer return when it is needed most
Regulators will help the Industry disrupt and
innovate so as to enrich the market yet
protect investors
All stakeholders will contribute and make it
POSSIBLE

14. Thank You
Sohail Jaffer
Managing Director
Business Development Insurance Services
Capita Middle East
DIFC, PO Box 49983,
Dubai, UAE
Mobile: +97150 429 6876
Email: sohail.jaffer@capita.co.uk
The information in this presentation does not constitute a sales offer, investment advice or an offer for the acquisition of financial products,
and shall not in this regard imply obligations for the entity or anybody else towards the readers of the presentation.
This presentation is solely intended to provide information on matters of interest for the readers and as such information is not meant to
replace the knowledge and the judgment of the readers who should make all appropriate inquiries.