1. 1

2. A standard, yet very different PPI
Kempen Capital Management seminar ‘Hollands Glorie’
De toekomst van ons pensioenstelsel: In search of the Holy Grail
April 23, 2015
24/04/2015
Private and Confidential

3. 3
And now for something completely
different...
• DC has the future
• ...as despite common myths..
• ...the underlying trend is unassailable
• PPI is the best vehicle
• ...supported by massive growth...
• ...and now breaking barriers....
• ...acting in the interest of participants
• Further improvement is on the way
• ...yet myths are tenacious...
• ... and participant interests should outweigh
providers’ interest.

4. 4
And now for something completely
different...
• DC has the future
• ...as despite common myths..
• ...the underlying trend is unassailable
• PPI is the best vehicle
• ...supported by massive growth...
• ...and now breaking barriers....
• ...acting in the interest of participants
• Further improvement is on the way
• ...yet myths are tenacious...
• ... and participant interests should outweigh
providers’ interest.

5. 5
1605
1st “pension”
State elderly
pension
1956
No more early
age retirement
2011 g
1st
fund
1970 -1990
Early
retirement
65 -> 67 72
DB to DC
1845
Final pay
avg. pay
2000 -2008
2004 2011 2011 g
PPI growth
2014

6. www.ingim.com
6
We look into the
future and we
see....

7. 7
7
The current system
is merely scratched

8. 8
...as despite common myths...
1. DC leads to unpredictable pension
2. DC does not contain collectivity and solidarity
3. DB has higher returns, because of
intergenerational solidarity
4. DC requires participant choices, and thus leads to
errors
5. DC is more expensive for it is often executed by
for-profit parties

9. 9
...the underlying trend is unassailable.
2040
0
1
2
3
4
5
6
7
8
9
1950196019701980199020002010202020302040205020602070208020902100
Number of workers per 65+
Bron: i-PensionSolutions, United Nations

10. 10
0
2
4
6
8
10
12
14
2015-04-16
2013-12-02
17-7-2012
3-3-2011
19-10-2009
4-6-2008
19-1-2007
6-9-2005
22-4-2004
9-12-2002
25-7-2001
10-3-2000
27-10-1998
12-6-1997
29-1-1996
14-9-1994
30-4-1993
17-12-1991
2-8-1990
20-3-1989
4-11-1987
20-6-1986
5-2-1985
22-9-1983
10-5-1982
24-12-1980
10-8-1979
10 Year Dutch bond yield
... the underlying trend is unassailable
Private and Confidential
0
3
6
9
12
15
18
21
Cost
Cost of € 1 annuity
>33x the price
Bron: i-PensionSolutions

11. 11
...the underlying trend is unassailable.
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
1999 2005 2010 2014
Number of participants in DC (Netherlands)
0
5
10
15
20
25
1999 2005 2010 2014
AUM(€bln)
AUM in DC (Netherlands)

12. 12
And now for something completely
different...
• DC has the future
• ...as despite common myths..
• ...the underlying trend is unassailable
• PPI is the best vehicle
• ...supported by massive growth...
• ...and now breaking barriers....
• ...acting in the interest of participants
• Further improvement is on the way
• ...yet myths are tenacious...
• ... and participant interests should outweigh
providers’ interest.

13. 13
Rigid expense
management

14. 14
PPI is the best vehicle (cost)
Source: LCP [2014] Source: LCP [2014]
Source: Towers Watson [2011 (!)]

15. 15
PPI is the best vehicle
• Proven concept
• Lowest cost
• Inherently innovative
• Participant focused
• VAT exempt
• Ringfencing
• Regulated in The Netherlands
• Suitable for:
• DC scheme
• Net pension
• CDC scheme
• Run-off portfolio
• Separated account
• Europe
• (self employed, currently excluded by law)

16. 16
...supported by massive growth
• Significant growth in AUM and premium
• Large corporations looking into PPI
• (political) perception has changed
€ 113 € 132 € 145 € 171
€ 241
€ 291
€ 380
€ 512
€ 658
€ 935
€ 1,241
0
200
400
600
800
1,000
1,200
1,400
2012K2 2012K3 2012K4 2013K1 2013K2 2013K3 2013K4 2014K1 2014K2 2014K3 2014K4
AUM(€mln)
PPI market
Bron: DNB

17. 17
...and now breaking barriers
Private and Confidential
The first open architecture Premium Pension Institution

18. 18
...and now breaking barriers
• i-PensionSolutions
• open platform
• serves the interest of participants
• Open platform facilitates:
• customers to create and maintain tailor made solutions
• asset managers and insurance companies to offer core
business products to their client base, integrated
within a total pension offering
• development of (optional) guarantees
• next generation DC products to be built
6

19. 19
Strategic choices:
• IPS is set up as a foundation. Its sole purpose is to serve and
protect the interests of the pension scheme participants and is a
not-for-profit organization
• Only best-in-class partners,
• stringent due diligence and compliance
• Operational excellence
• Distribution through partners
• SwissRe offers re-insurance, Credit Suisse capital market
guarantees
• Initial start in The Netherlands, European ambition
• Optional guarantees (capital market and insurance)
Core values:
• Protect the interests of the participants
• Transparency
• Integrity
• Independent
• High standards for access to platform
• Strong compliance framework
• Clear governance
• Cost efficient
• Committed for the long term (and strongly capitalized)
...and now breaking barriers

20. 20
Synergy from
cooperation

21. 21
Committed, yet
open

22. 22
Best of all worlds
• i-PensionSolutions offers Pension Savings Product
• Employer selects asset manager and investment strategy
• Employer can select Insurance Company and Insurance Cover
• Pension Administration and integrated communication is executed by i-
PensionSolutions
• The employer signs two agreements:
• [A] Pension Execution to cover Asset Accumulation (as described before)
and,
• [B] Insurance Policy Agreement (Pension Insurance Product) to cover
Biometric Risk insurance with an insurance company
Asset
Manager
Administrator
Stichting International Pension Solutions
(regulated pension entity)
Administration
Asset
Management
[Employer] (Former) Employees
Pension Agreement
Pension
Execution
Agreement
Claim on
vested rights
Custodian
Management Board
Supervisory
Council
External
Advisors
Order
Execution/
Custody
Investment PolicyAdvise on:
Legal, Tax, Actuarial
Investment, Risk Mngt
Investment
Committee
Asset Liability
Committee
Insurance
company
Insurance
Insurane
Policy
Agreement

23. 23
... acting in the interest of participants
Independent governance and
dedicated products
Standard Tailor made
Plain vanilla
Advanced
- Allocation based
on time to maturity.
General set-up
- Allocation based
on time to maturity
- Client specific
- Allocation depending
on (a.o) funding &
standard guarantee
Fully client specific,
both guarantee and
investment scheme
Level of tailoring
Levelofsophistication
SME, Corporates]
Large corporates, multinationals,
other collectives,
Corporates
Multinationals, large other
collectives

24. 24
And now for something completely
different...
• DC has the future
• ...as despite common myths..
• ...the underlying trend is unassailable
• PPI is the best vehicle
• ...supported by massive growth...
• ...and now breaking barriers....
• ...acting in the interest of participants
• Further improvement is on the way
• ...yet myths are tenacious...
• ... and participant interests should outweigh
providers’ interest.

25. 25
...yet myths are tenacious
• Lifecycle invests in equity for young people
because of ‘investment horizon’
• A longer ‘investment horizon’ leads to higher return
• Flywheel of disbursements
• With pension funds, retirees retain investment
exposure
• Longevity risk can be mitigated in a collective

26. 26
What will
‘doorbeleggen’
bring us?

27. 27
Prerequisite for
‘doorbeleggen’
• Prevent money death
• Individual economic ownership
• Executable
• Tailoring to individual
• Flexible
Risk attittude Risk capacity
Risk
position

28. 28
... and participant interests should outweigh providers’ interest.
Source: i-PensionSolutions: “Doorbeleggen en verbeteringen in Defined Contribution” 2015. denationalepensioendialoog.nl/item/596
Risk willingness
Risk capacity
High
HighLow
Low
Annuity
Cash / Lump sum
ALDA | Partial annuity
Continue lifecycle
ALDA | Partial annuity
ALDA | Partial annuity

29. www.ingim.com
29
Within the next 5 years, my pension will be
with a PPI

30. A new road towards modern and innovative
pension solutions in Europe

31. Appendix: Various slides

32. 32
Unfunded plan on
Balance Sheet
Partial buy-out /
LDI solution
Insurance Solutions
Transfer risk to insurance vehicle
Low
Required Initial funding (necessary liquidity for single premium)
HighLow
RiskReduction
High
Cash injection into pension plan/
traditional asset allocation
Change plan benefits
(DB DC)
Traditional full buyout
(Insured annuities)
Close fund to new
entrants and accruals
(hard freeze)
Close fund to
new entrants
Asset Management Solutions
Manage Risk-Return
Cash Injection/
LDI solution
Change in employee benefits
Transfer risk to employees
Insurance SolutionsAsset Management SolutionsPlan Design Solutions
Diagram 1: Illustrative Example of Pension Risk Management Solutions
Current
Current
... the underlying trend is unassailable

33. 33
A longer ‘investment horizon’ leads to higher return
Private and Confidential
• Longest, reliable data goes back to
1871
• Only nine complete, independent
series of 15 year return
• Statistically infeasible to make valid
forward looking statements
0
100
200
300
400
500
600
700
800
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15 jaars rendementsperiodes
1871
1886
1901
1916
1931
1946
1961
1976
1991
2006
Bron: RobertShiller,i-PensionSolutions

34. 34
Growth and Inflation are drivers of interest rate
-5
-4
-3
-2
-1
0
1
2
3
4
5
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Real GDP growth (Euro)
Source:IMF World EconomicOutlookApril 2015
0
0.5
1
1.5
2
2.5
3
3.5
4
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Inflation ( Euro)
Source:IMF World EconomicOutlookApril 2015

35. 35
Interest rate is rightfully low. But perhaps too low?
• The "Yuppie/Nerd Ratio"
compares the number of 25-to
34-year-olds ("Yuppies") to the
number of 45-to 54-year-olds
("Nerds").
• This ratio is said to do a good
job of tracking the demographic
pressures on long term interest
rates.
• Nerds buy bonds for retirement,
Yuppies borrow to buy houses,
cars, cribs, etc.
0
1
2
3
4
5
6
7
8
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 2049
10yearrate
YuppieNerdRatio
Yuppie Nerd Ratio (Netherlands)
Yuppie / Nerd (LHS)
10year rate (RHS)
Regressed value
Source: Datastream, Census Bureau, ING Investment Management

36. 36
Risk of underfunding weighs heavily on sponsors (or whomever bears the risk)
Private and Confidential
0
2
4
6
8
10
12
14
16
18
20
85
87
88
90
91
93
94
96
97
99
100
102
103
105
106
108
109
111
112
114
115
117
118
120
121
123
124
126
Fundingratiopoints
Funding ratio
Estimated value 1 year guarantee of additional funding
Bron: i-PensionSolutions

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