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					                                           The Cerulli Report Release
           TH E C E RU L L I R EP O RT




                                                                                                                                                        July 2010

                                           Opportunities in European Corporate DC Pensions
The European pension landscape is set to alter dramatically over the next five years, and there are significant opportuni-
ties for fund managers arising from this shift. This report analyzes the pension and retirement landscape in Europe and
examines the roles of consultants and platforms, the proliferation of product choices, and the impact on fees. The report
addresses market sizing, product choices, and competitive analysis through a series of surveys and interviews with DC
pension funds, pension managers, platforms, consultants, and other stakeholders.

INSIDE LOOK:
Key Findings:                                                                    Exclusive data in this report:                              Cerulli Associates
                                                                                                                                                  Boston
• The primary opportunity in this marketplace consists of offering               • Key factors regarding addressable
                                                                                   corporate DC pension assets in Europe                        Singapore
  funds within open-architecture DC plans and multi-asset solutions.                                                                              London
                                                                                   by country
• The markets with the most immediate potential are the U.K, France,
  Germany, and Italy.                                                            • Forecast for Europe DC pension assets
                                                                                   to 2014                                                  Coverage Includes:
• The IORPs directive is one of a variety of possible frameworks                                                                               Netherlands
  through which to achieve cross-border pension pooling in Europe.               • Comparable DC Pension assets in Europe
                                                                                   both by region and by country                             United Kingdom
• Product design needs work, and opportunities abound for asset                                                                                   France
  managers that create viable solutions. Innovation must include bet-            • In-depth case studies of select pension                      Germany
  ter default funds and products for the decumulation phase.                       funds and platform providers
                                                                                                                                                   Italy
                                                                                                                                                  Spain
  Total European Defined Contribution Pension Assets Under Management, 2004-2009E (€ billions)                                                 Scandinavia
                                                                                                                 €1,469                        Switzerland
       €1,500                                                                                                                                 Central Europe
                                                                            €1,355
                                                                                             €1,300
                                                   €1,190
                                                             €1,251                                                                          Eastern Europe
       €1,200
                                         €1,020
                                                                                                                                        REPORT ROADMAP
         €900
                                                                                                                                        • Marketsizing
         €600                                                                                                                           • Transitioning from DB to
                                                                                                                                          DC
                                                                                                                                        • Key Regulations Affecting
         €300                                                                                                                             Corporate DC Pensions
                                                                                                                                        • Key Players
           €0                                                                                                                           • Opportunities and
                                         2004      2005      2006            2007             2008                2009E                   Challenges
                                                                                      Sources: Cerulli Associates, various data feeds   • Regional European
                                                                                                                                          Growth Trends
                                                                                                                                        • Designing Products for
  This report helps asset managers:                                                                                                       DC Plans
  • Understand the structure of the different national                •   Analyze pension product trends and level of                   • Distribution and the Role
                                                                                                                                          of Platforms
    pension systems in Europe as well as upcoming                         competition across Europe
    regulatory changes                                                                                                                  • Cross-Border Plans
                                                                      •   Evaluate the opportunities and challenges arising in          • The Role of Consultants
  • Quantify the size and potential growth of addressable                 the DC pension market                                         • Competitor Solutions
    pension assets by region and by country                                                                                             • Example Platforms and
                                                                                                                                          Plans
                                                                                                                                        • Growth Projections
  Purchase includes:                                                  For more information on pricing, please contact:                  • Significant Upcoming
  • Hardcopy                                                          Marketing & Business Development                                    Legislation
  • Online Access                                                     CAmarketing@cerulli.com                                           • Outlook and Challenges
  • Exhibits in Excel format                                          +1 617-437-0084
  • Key Findings in PDF
                                                                          Table of contents, exhibit list, user examples, and
                                                                                     sample pages are attached
                                  The Cerulli Report Release                                                                                          July 2010
  TH E C E RU L L I R EPORT




                                  Opportunities in European Corporate DC Pensions


                                               USER SCENARIOS:
                                               The following are examples of how this report can be applied to business planning and strategic decision-
                                               making:

                                               Scenario 1: A U.S.-based asset management firm wants to expand into Europe and has begun to look at
                                               the region’s pension sector as part of its strategic research. It lacks an understanding of the size and char-
                                               acter of Europe’s pension sector, including the general structure, contribution level, and split between DB
                                               and DC. The Cerulli Report: Opportunities in European Corporate DC Pensions provides insight into the fol-
                                               lowing questions:
                                                         • How large is each country’s pension fund marketplace and what do the demographic and
                                                            macroeconomic dynamics present for each of these markets?
                                                         • What are the DC opportunities across these markets?
                                                         • How big is the European corporate DC pension sector and what are the growth projections
                                                             into 2014?
                                                         • Who are the largest institutional asset managers in Europe?
                                                         • What is the asset allocation breakdown of total European pension assets?


                                               Scenario 2: A German asset manager with an existing institutional book wants to evaluate opportunities in
                                               the corporate DC pension sector. It has already identified Germany and the U.K. as its two target markets,
                                               but wants detailed information about the unique dynamics of specific countries. The Cerulli Report:
                                               Opportunities in European Corporate DC Pensions addresses the following questions:
                                                        • How big is the German pension fund marketplace, how much of its assets are in DC, and
                                                            what is the level of contributions?
                                                        • What is the size of the U.K. DC pension marketplace and how are trustees making changes
                                                             to their existing pension structures? Also, what impact will NEST bring to the pension
                                                             landscape in the U.K.?
                                                        • Default funds in most DC markets attract significant assets. In which asset classes do
                                                            they invest? What types of fee structures do they charge?


                                               Scenario 3: An asset manager already managing retirement assets in the core European markets is under-
                                               taking a planning exercise to determine how best to grow its business, specifically in the DC segment. It
                                               lacks forecasts for addressable corporate DC pension assets—retirement savings that managers can
                                               potentially access—to make the exercise meaningful. It also wants to understand the viability of manag-
                                               ing pooled vehicles for cross-border pension assets. The Cerulli Report: Opportunities in European
                                               Corporate DC Pensions evaluates the following questions:
                                                          • How are DC pension assets projected to grow in Europe?
                                                          • To what extent can the historical growth of pension assets be attributed to net contributions
                                                            and market appreciation forces?
                                                          • How can fund managers tap into opportunities to offer cross-border pooled pension fund
                                                             vehicles?




                              C                For more information on how to apply this report to your firm’s unique needs, please contact our Marketing
                              A                & Business Development team at +1 617-437-0084, CAmarketing@cerulli.com.

C e r u l l i
A s s o c i a t e s
                                        The Cerulli Report Release
            TH E C E RU L L I R EPORT




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         July 2010

                                        Opportunities in European Corporate DC Pensions

Included with purchase:                              To purchase this report, fill out this form and fax to +1 617-437-1268 or visit our website at
                                                     www.cerulli.com.
• Hardcopy of report
• Online access
                                                     Name:
• Exhibits in Excel format
                                                     Firm:
• Key findings in PDF format

                                                     Address:




                                                     Phone:

                                                     Email:




                                                                                                                            Please contact Marketing & Business Development to learn more about pricing.
                                                                                                                                                        +1 617-437-0084
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                                                                                                                                                                                                                                                                                                                  Special Feature:
                                                                            To view thumbnails of the contents of this report, please visit our
                                                                 website at www.cerulli.com. Go to Order/Info and click on ‘view’ next to the report title.


                                                                            EXHIBIT 8: AMOUNT OUTSOURCED BY GLOBAL SOVEREIGN                                                                                    EXHIBIT 71: KOREA INVESTMENT CORPORATION’S                                                                                   EXHIBIT 84: KUWAIT INVESTMENT AUTHORITY’S ASSETS                                                                            EXHIBIT 94: GOVERNMENT PENSION FUND GLOBAL’S




Cerulli Associates
                                                                            WEALTH FUNDS, MARCH 2010 (US$ BILLIONS) (PART 2)                                                                                    ORGANIZATION CHART, MARCH 2010                                                                                               UNDER MANAGEMENT BY INVESTMENT GEOGRAPHY, 2009                                                                              CHANGE IN FUND MARKET VALUE, 2Q 2009–1Q 2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                                         (NOK BILLIONS)
                                                                   US$400                                                                                                                                                                                                                                                                                                 Other emerging markets,
                                                                                360.0                                                                                                                                                                                          Steering Committee                                              Asia including Japan,              5.0%                   United States,                                                                                          325.1
                                                                                                                                                                                                                                                                                                                                                                                                                                                                         NOK350
                                                                      350                                                                                                                                                                                                                                                                              15.0%                                                40.0%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                               300         269.9

                                                                      300                                                                                                                                                                                                      Board of Directors                   Auditor                                                                                                                                                    250




699 Boylston Street
                                                                                                                                                                                                                                                                                                                                                                                                                                                                               200
                                                                      250
                                                                                                                                                                                                                                                                                                                                                                                                                                                                               150
                                                                                                                                                                                                                                                                                President & CEO                    Audit Unit                                                                                                                                                                                                                          103.4
                                                                                                                                                                                                                                                                                                                                                                                                                                                                               100                                                    83.9
                                                                      200
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                40.4                     48.9
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             35.9
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                50                                                                          19.3
                                                                      150                                                                                                                                                                                                                                                                                                                                                                                                                                                                            0.2
                                                                                              123.5                                                                                                                                 Investment Management                   Corporate Management             Risk Management                                                                                                                                                     0
                                                                                                                                                                                                                                         Division (CIO)                         Division (COO)                Division (CRO)                                                                                                                                                           -1.3
                                                                                                                                                                                                                                                                                                                                                                      Europe,
                                                                                                                                                                                                                                                                                                                                                                                                                                                                               -50




Boston MA 02116
                                                                      100                                                                                                                                                                                                                                                                                              40.0%                                                                                                                                                     -28.3
                                                                                                             65.0          57.7
                                                                                                                                                                                                                                                                                                                                             Sources: Kuwait Investment Authority, Cerulli Associates
                                                                                                                                         55.0           53.6                                                                                                                                                                                                                                                                                                                -100
                                                                                                                                                                                                                  Investment        Public           Private          Special                              Risk            Compliance
                                                                       50                                                                                             25.0                                          Strategy        Markets          Markets        Investment                         Management            Team                                                                                                                                           -150
                                                                                                                                                                                       9.8          5.0              Team           Group            Group             Team                               Team

                                                                                                                                                                                                                                                                                                                                                      In particular, there has been a shift toward emerging markets. Within     Investment trends
                                                                        0                                                                                                                                                                                                                                                                                                                                                                                                   -200

                                                                                                                                                                                                                                                                                                                                             that, the KIA has been working hard to develop expertise on sub-Saharan
                                                                              Abu Dhabi   Kuwait         China        The Future Hong Kong Government               National          Korea       National                                                                                                                                                                                                                                                                  -250                             -210.8
                                                                             Investment Investment Investment           Fund      Monetary      Pension             Pension        Investment     Council
                                                                                                                                                                                                                                                                                                                                             Africa, collecting data and considering ways to gain suitable exposure. The
                                                                                                                                                                                                                                                                Corporate          Investment       Information
                                                                              Authority Authority (2) Corporation (3)             Authority      Fund               Service        Corporation   for Social                                                     Planning &          Operation       Technology
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         2Q 2009               3Q 2009              4Q 2009           1Q 2010

                                                                                                                                                                                                                                                                                                                                             KIA is also looking closely at thematic ways of investing, in particular in
                                                                                                                                 Investment      Global                                           Security                                                     Affairs Group          Team             Team




Tel: +1 617 437 0084
                                                                                                                                  Portfolio (4)                                                   Fund (5)                                                                                                                                                                                                                                                                                      Krone rate                        Return                        Inflow
                                                                            Source: Cerulli Associates                                                                                                          Sources: Korea Investment Corporation, Cerulli Associates                                                                    renewable technologies, green technology, and investments related to the
                                                                                                                                                                                                                                                                                                                                             environment; these will chiefly be private equity investments.
                                                                            Notes: (1) Cerulli estimates that as of March 31, 2010, the Future Generations Fund is approximately                                                                                                                                                                                                                                                                                         Sources: Norges Bank Investment Management, Cerulli Associates
                                                                            US$190 billion. (2) Figure used in the exhibit is the sum of third-party mandates that have been
                                                                            awarded. (3) Figure used in the exhibit is 40% of the investment portfolio, estimated to be US$137.5
                                                                                                                                                                                                                          KIC is among the more transparent SWFs in the world, producing a                                                          The KIA has made a number of high profile strategic stake purchases
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 The NOK2,763 billion assets figure was made up of NOK1,730
                                                                            billion. (4) Some domestic assets are also outsourced but are not reflected in this figure. (5) Not
                                                                            represented in the exhibit.                                                                                                         detailed annual report and periodically disclosing assets under management,                             One of the more
                                                                                                                                                                                                                                                                                                                                             in major global institutions. Some of these, such as BP and DaimlerChrysler,
                                                                                                                                                                                                                                                                                                                        transparent SWFs
                                                                                                                                                                                                                                                                                                                                                                                                                                                                         billion of equity and NOK1,033 billion of fixed-income investments.
                                                                                                                                                                                                                returns, asset allocation, and financial statements, among other things. It also                                             date back decades; Daimler, for example, is understood to be held partly
                                                                                    A widespread comment about sovereign funds is that they either want                                                                                                                                                                                                                                                                                                                          Growth has been rapid over the last 12 months, up almost NOK700
                                                                                                                                                                                                                has a detailed ethics management policy, including, unusually, an ethics                                                     because of its usually strong dividend yield, last year notwithstanding. More
                                                                            pure passive mandates, or they want highly specialized best ideas. Many
                                                                                                                                                                                     Funds are looking
                                                                                                                                                                                                                                                                                                                                                                                                                                                                         billion in a year: the market value was NOK2,076 billion in the first quarter
                                                                                                                                                                                     for pure passive           hotline to report inappropriate or unethical conduct by employees, and a                                                     recently, public attention has focused on bank holdings: Citigroup (subse-
                                                                            sovereign funds—notably GIC, Norway and ADIA—are only likely to listen                                                                                                                                                                                                                                                                                                                       of 2009.
                                                                                                                                                                                     mandates or highly
                                                                                                                                                                                                                stated policy on so-called soft dollars (unofficial commitments of                                                           quently exited at a hefty profit); Merrill Lynch, which was subsequently
                                                                            to a manager offering a portfolio highly specific in geography, sector, or both,
                                                                                                                                                                                     specialized ideas
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                In the first quarter of 2010, the fund returned 3.9%, driven by global
                                                                                                                                                                                                                commissions or business in exchange for services).                                                                           taken over by Bank of America; Industrial and Commercial Bank of China;                                   In 1Q 2010, the
                                                                            rather than, say, a general U.S. equity product.                                                                                                                                                                                                                                                                                                                                             equity and fixed-income markets. It beat its benchmark by 0.4 of a
                                                                                                                                                                                                                                                                                                                                             Dow Chemical; BlackRock; and Visa. These strategic holdings are                                          return was 3.9%

                                                                                    Worldwide, hedge fund managers should be able to find opportunity                                                           Staff                                                                                                                                                                                                                                                    percentage point. Its equity investments returned 4.9%, and fixed income
                                                                                                                                                                                                                                                                                                                                             considered part of the equity allocation.
                                                                            with sovereign funds, provided they can demonstrate a track record of                                                                         Young-wook Chin is the President and CEO of KIC. He was                                                                                                                                                                                        2.1%, measured in international currency.



28 Maxwell Road
                                                                            delivering alpha. Even some central banks, such as HKMA in the investment                                                           appointed in July 2008 and his term concludes in July 2011. Chin was                                                                                                                                                                                            This followed a miserable 2008 (-23.3%) and a record 2009 (25.6%).
                                                                            portfolio of its Exchange Fund, are believed to be looking at hedge funds as                                                        appointed for his mixture of government and practical financial experience:                                                                                                                                                                              Since inception in January 1988, the fund has an annualized gross return of
                                                                            a diversification measure, and they appear to be increasingly in favor in                                                           he is a former Ministry of Finance staffer who has also worked as an IMF                                                                                                                                                                                 4.9%, measured in international currency, and an annual net real return of
                                                                            Korea and Australia, among other places, as well as being one of the few                                                            economist, CEO of Hanwha Securities, and President and CEO of Hanwha                                                                                                                                                                                     2.9%, after management costs and inflation. This is below the intended long-
                                                                            places where there are opportunities with the QIA, Temasek, and GIC.                                                                Non-Life Insurance.                                                                                                                                                                                                                                      term real returns of 4%.




Singapore 069120                                                                  Global Sovereign Wealth Funds                                                                39                                       Global Sovereign Wealth Funds                                                             155                              Global Sovereign Wealth Funds                                          181                                            198                                                    Global Sovereign Wealth Funds




Tel: +65 6327 4045                                               Page 39                                                                                                                                      Page 155                                                                                                                     Page 181                                                                                                 Page 198

11-15 Betterton Street
London WC2H 9BP
+44 20 7470 8817

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         C
www.cerulli.com                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          A
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      C e r u l l i
                                                  File: Eblast                                                                                                                                                                                                                                                                                                                                                                                                                                                        A s s o c i a t e s
                           TABLE OF CONTENTS

INDEX OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
REPORT SCOPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
        Beneficiaries of this Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
        Report Roadmap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
        Market Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
        Designing Plans to Meet Savers’ Needs . . . . . . . . . . . . . . . . . . . . .15
        Prognosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
EXCHANGE RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
CHAPTER 1: AN INTRODUCTION TO DC PENSION PLANS . .18
        Market Sizing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
        Transition from DB to DC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
        Key Regulations Affecting Corporate DC Pensions . . . . . . . . . . .29
        Key Players . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
        Opportunities and Challenges for Fund Managers . . . . . . . . . . . . .33
CHAPTER 2: REGIONAL REVIEW . . . . . . . . . . . . . . . . . . . . . . . . .42
        Regional European Growth Trends . . . . . . . . . . . . . . . . . . . . . . . .42
        The Netherlands and the United Kingdom . . . . . . . . . . . . . . . . . . .43
        France, Germany, Italy, and Spain . . . . . . . . . . . . . . . . . . . . . . . . .54
        Scandinavia and Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
        Central and Eastern Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
CHAPTER 3: MOVING TOWARD DC PENSIONS IN EUROPE .82
        Designing Products for DC Plans . . . . . . . . . . . . . . . . . . . . . . . . . .82
                Default Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
                Decumulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87
                Fees and Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88
        Distribution and the Role of Platforms . . . . . . . . . . . . . . . . . . . . .90
        Cross-Border Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92
                Cross-Border Pensions Pooling . . . . . . . . . . . . . . . . . . . . . . .95
        The Role of Consultants in a DC Environment . . . . . . . . . . . . . . .97
        Competitor Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98


      Opportunities in European Corporate DC Pensions                                                           3
        Example Platforms and Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99
                MetallRente . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99
                Fidelity DC Fund Platform . . . . . . . . . . . . . . . . . . . . . . . . . .100
                Telegraph Staff Pension Plan . . . . . . . . . . . . . . . . . . . . . . . .101
CHAPTER 4: THE FUTURE OF DC PENSIONS IN EUROPE . . .104
        Growth Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104
        Significant Upcoming Legislation . . . . . . . . . . . . . . . . . . . . . . . . .106
        Outlook and Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
        United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
        Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112
        France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .116
        Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119
        Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122
        Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126
        Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129
        Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132
        Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .135
        Central Eastern Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .137
INDEX OF COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .143




4                                         Opportunities in European Corporate DC Pensions
                              INDEX OF EXHIBITS

Exchange Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
1. Total European Pension Assets, 2004–2008 . . . . . . . . . . . . . . . . . . . . .19
2. Growth and Flow Attributes for Total Pension Assets Under
      Management, 2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
3. Gross European Pension Contributions, 2004–2008 . . . . . . . . . . . . . .21
4. European Contributions by Country, 2004–2008 . . . . . . . . . . . . . . . . .22
5. Breakdown of Total European Pension Investment Allocation,
      2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
6. European Pension Assets Under Management by Country,
      2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
7. Total European Defined Contribution Pension Assets Under
       Management, 2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
8. Proportion of European Pension Assets Under Management in
      Defined Contribution Schemes by Country, 2004–2008 . . . . . . . .25
9. European Defined Contribution Pension Assets Under Management
      by Country, 2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
10. Providers of Mandatory/Workplace Defined Contribution Pensions,
      2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
11. Selected European Defined Contribution Schemes by Country . . . .31
12. Largest 10 Managers of European Institutional Assets . . . . . . . . . . .32
13. Cerulli Survey Respondents’ Views on Multi-Asset Asset-Gathering
      Prospects by Distribution Channel, 2010 . . . . . . . . . . . . . . . . . . . .34
14. Summary of Characteristics of European Institutions for
      Occupational Retirement Provisions for Selected Countries,
      September 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
15. Summary of European Pensions, 2010 (Part 1) . . . . . . . . . . . . . . . . .39
15. Summary of European Pensions, 2010 (Part 2) . . . . . . . . . . . . . . . . .40
15. Summary of European Pensions, 2010 (Part 3) . . . . . . . . . . . . . . . . .41
16. Overview of European Occupational Pension Funds . . . . . . . . . . . . .43
17. Total U.K. Pension Fund Assets Under Management, 2004–2008 . .44
18. U.K. Pension Fund Assets Under Management by Scheme Type,
      1999–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
19. Number of Members in U.K. Private Pension Funds, July 2009 . . . .46
20. Percentage of Trustees Implementing Significant Changes in
      Pension Arrangements, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46



       Opportunities in European Corporate DC Pensions                                                         5
21. Number of Funds Available to Members in U.K. Defined
      Contribution Schemes, 2006–2008 . . . . . . . . . . . . . . . . . . . . . . . .47
22. Investment Choices Offered by U.K. Defined Contribution
      Schemes, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
23. Number of Switches Allowed to Members in U.K. Defined
      Contribution Schemes within a Year, 2006–2008 . . . . . . . . . . . . .49
24. Pension Trustees’ Views on National Employment Savings Trust’s
      Operations, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
25. Total Dutch Pension Fund Assets Under Management,
      2005–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
26. Total Externally Managed Assets Under Management of Dutch
      Pension Plans, 1993–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
27. Geographical Distribution of Dutch Pension Asset Managers,
      2007–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
28. Largest 10 Managers of Externally Managed Dutch Pension Assets,
      1Q 2008–1Q 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
29. Dutch Retirement Fund Assets Under Management by Scheme Type,
      1999–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
30. Overview of the French Pension System Structure . . . . . . . . . . . . . .56
31. Overview of the French Pension Schemes PERCO, PERE, and
      PERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
32. Total PERCO Assets Under Management, 2005–2009 . . . . . . . . . . .58
33. Total Number of Employees Covered and Companies Offering
      PERCO Schemes, 2005–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
34. Overview of the German Pension System . . . . . . . . . . . . . . . . . . . . .60
35. German Occupational Pension Plan Assets Under Management by
      Funding Mechanism, 2003–2007 . . . . . . . . . . . . . . . . . . . . . . . . . .61
36. German Spezialfonds Assets Under Management, 2005–2009 . . . . .62
37. Number of Riester Pension Contracts by Product, 2004–2008 . . . . .63
38. Overview of the Italian Pension System . . . . . . . . . . . . . . . . . . . . . .64
39. Italian Pension Assets Under Management, 2004–2008 . . . . . . . . . .65
40. Italian Open Pension Fund Market Assets Under Management by
       Key Players, 2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
41. Overview of the Spanish Pension System . . . . . . . . . . . . . . . . . . . . .67
42. Spanish Pension Assets Under Management by Plan Type,
      2005–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
43. Spanish Pension Assets Under Management by Pension Type,
      2001–2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69



6                                        Opportunities in European Corporate DC Pensions
44. Largest 10 Spanish Pension Fund Managers by Assets Under
      Management, 2007–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
45. Overview of the Private Pension System in Denmark . . . . . . . . . . . .71
46. Total ATP Investable Asset Breakdown by Type, 2007–2009 . . . . . .72
47. Overview of the Swedish Pension System . . . . . . . . . . . . . . . . . . . . .73
48. Overview of Sweden’s First-Pillar National Pension System . . . . . .73
49. Swedish Buffer Funds, AP1 to AP4 and AP6, Assets Under
      Management, 2005–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
50. Swedish AP1 to AP4 Funds Assets Under Management by
      Management Style, 2005–June 2009 . . . . . . . . . . . . . . . . . . . . . . .75
51. Swedish Premium Pension Authority Assets Under Management by
      Investment Objective, 2005–2009 . . . . . . . . . . . . . . . . . . . . . . . . .76
52. Total Swiss Occupational Pension Assets, 2004–2008 . . . . . . . . . . .77
53. Swiss Pension Fund Assets Under Management by Scheme Type,
      1999–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
54. Defined Contribution Schemes in Selected Central and Eastern
      European Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
55. Central and Eastern European Pension Funds Assets Under
      Management, 2004–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
56. Mandatory Pension System (Second-Pillar) Assets Under
     Management of Selected Central and Eastern European Countries,
     2007–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80
57. Central and Eastern European Second-Pillar Key Investment Limits
      and Return Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81
58. Default Fund in Defined Contribution Schemes with Investment
      Choice by Type, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86
59. Guarantees in Defined Contribution Schemes with No Choice,
      2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87
60. Maximum Fees and Charges in Defined Contribution Schemes for
     Selected European Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
61. Overview of Corporate Pension Plan in the United Kingdom . . . . . .91
62. Number of Total and New European Cross-Border Institutions for
      Occupational Retirement Provisions, 2007–2009 . . . . . . . . . . . . .93
63. Structure of the AEGON Global Multi Manager Funds . . . . . . . . . .96
64. Profile of Metallrente . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
65. Profile of the Fidelity DC Fund Platform . . . . . . . . . . . . . . . . . . . . .101
66. Profile of the Telegraph Staff Pension Plan . . . . . . . . . . . . . . . . . . . .103




       Opportunities in European Corporate DC Pensions                                                         7
67. European DC Pension Assets Under Management Forecast,
      2009E–2014E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105
68. Overview of the U.K. Private Pension System . . . . . . . . . . . . . . . . .108
69. Demographic and Macroeconomic Data for the United Kingdom,
      2005–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
70. U.K. Pension Fund Assets Under Management by Plan,
      2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .109
71. U.K. Average Pension Fund Assets Under Management by Asset
      Class, 2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .110
72. Average of Contributions Paid into U.K. Pension Schemes as a
      Percentage of Total Earnings, 2005–2009 . . . . . . . . . . . . . . . . . . .111
73. Overview of Dutch Externally Managed Pension Assets, 2009 . . . .112
74. Demographic and Macroeconomic Data for the Netherlands,
      2005–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112
75. Total Dutch Pension Fund Assets Under Management by
      Investment Type, 2005–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113
76. Number of Dutch Pension Funds by Type, 2005–2009 . . . . . . . . . . .113
77. Dutch Defined Contribution Pension Contributions by Source,
      2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114
78. Fiduciary Managers of Dutch Pension Plans, 2009 . . . . . . . . . . . . . .114
79. Largest 10 Dutch Multimanaged Assets by Manager, 2008–2009 . .115
80. Demographic and Macroeconomic Data for France, 2005–2009 . . .116
81. French Pension Fund Assets Under Management, 2004E–2008 . . . .116
82. French Occupational and Personal Pension Funds Assets Under
      Management by Plan, 2006–2008 . . . . . . . . . . . . . . . . . . . . . . . . .117
83. French Occupational and Personal Pension Contribution Breakdown
      by Plan, 2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .117
84. Total Number of Persons Covered by French Occupational and
      Personal Pension Plans, 2004–2008 . . . . . . . . . . . . . . . . . . . . . . . .118
85. Largest 10 French Workplace Savings Pension Fund Managers,
      2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118
86. Demographic and Macroeconomic for Germany, 2005–2009 . . . . . .119
87. Largest 10 German Pension Funds, 2006 . . . . . . . . . . . . . . . . . . . . . .119
88. Total German Contributions and Total Benefits for Second-Pillar
      Pensions, 2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120
89. German Pensions Investment Structure by Asset Class, 2007–2009 .121
90. Demographic and Macroeconomic Data for Italy, 2005–2009 . . . . .122




8                                        Opportunities in European Corporate DC Pensions
91. Italian Open Pension Fund Market Assets Under Management by
       Key Players, 2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122
92. Number of Italian Complementary Pension Funds by Type,
      2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123
93. Total Italian Pension Contributions by Pension Type, 2004–2008 . .124
94. Italian Pension Fund Annual Membership by Pension Type,
       2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125
95. Demographic and Macroeconomic Data for Spain, 2005–2009 . . . .126
96. Number of Spanish Pensioners and Average Annual Pension by
      Age Group, 2002–2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126
97. Spanish Pension Plans Contributions and Benefits, 2004–2008 . . . .127
98. Spanish Employer and Employee Contributions as a Percentage of
      Total Contributions, 2001–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . .128
99. Demographic and Macroeconomic Data for Denmark, 2005–2009 .129
100. Total ATP Assets Under Management, 2005–2009 . . . . . . . . . . . . .129
101. ATP Pension Contributions, 2005–2009 . . . . . . . . . . . . . . . . . . . . . .130
102. Total Number of ATP Members, 2005–2009 . . . . . . . . . . . . . . . . . .131
103. Overview of Sweden’s Second-Pillar Occupational Pension
      Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132
104. Demographic and Macroeconomic Data for Sweden, 2005–2009 .132
105. Sweden AP1 to AP7 Funds Assets Under Management,
      2005–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133
106. Swedish Premium Pension Authority Assets Under Management,
      2005–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133
107. Contributions to the National Pension System: The Income
      Pension and Premium Pension Sector, 2004–2008 . . . . . . . . . . . .134
108. Overview of Swiss Occupational Pension Funds, 2008 . . . . . . . . . .135
109. Demographic and Macroeconomic Data for Switzerland,
      2005–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .135
110. Swiss Occupational Pension Assets by Asset Class, 2004–2008 . . .135
111. Swiss Occupational Pension Assets by Size of Total Assets
      Managed by the Pension Fund, 2007–2008 . . . . . . . . . . . . . . . . . .136
112. Swiss Occupational Pension Contributions by Type, 2004–2008 . .136
113. Overview of Selected Central and Eastern European Country
      Pension Systems (Part 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .137
113. Overview of Selected Central and Eastern European Country
      Pension Systems (Part 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .138




       Opportunities in European Corporate DC Pensions                                                    9
114. Pension Pillar Classification in Central and Eastern Europe vs.
      Western Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .138
115. Voluntary Pension Funds (Third Pillar) Assets Under Management
      of Selected Central and Eastern European Countries, 2H 2009 . .139
116. Demographic and Macroeconomic Data for Selected Central and
      Eastern European Countries, 2009 . . . . . . . . . . . . . . . . . . . . . . . . .139
117. Number of Participants in Mandatory (Second Pillar) and
      Voluntary (Third Pillar) Pension Funds of Selected Central and
      Eastern European Countries, 2H 2009 . . . . . . . . . . . . . . . . . . . . . .140
118. Polish Open Pension Funds (Second Pillar) Assets Under
      Management, 2004–2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .141
119. Czech APF CR Pension Assets Under Management, 2004–2009 . .141
120. Hungarian Mandatory and Voluntary Pension Funds Assets Under
      Management, 2004–2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .142
121. European Defined Contribution Pension Assets Under
      Management Forecast, 2009–2014E . . . . . . . . . . . . . . . . . . . . . . .142




10                                     Opportunities in European Corporate DC Pensions
                          METHODOLOGY

       Opportunities in European Corporate DC Pensions highlights
opportunities available in the hugely important area of European retirement
by evaluating the roles of consultants and platforms, the proliferation of
product choices, and the impact on fees. Given the opacity of data, Cerulli
addresses fundamental issues such as market sizing, product choices, and
competitive analysis through a series of surveys and interviews with defined
contribution (DC) pension funds, pension managers, platforms, consultants,
and other stakeholders.
      This Cerulli report, a first in this area, takes a look at the pension
framework not just in the largest European countries but also the developed
Scandinavian region, in addition to emerging opportunities in the Central
Eastern European region. The effects of an already aging population and a
deeply impacted equity market are adding to the pressures experienced by the
ongoing shift from a defined benefit (DB) to DC pension environment.
Coupled with a slew of regulatory changes as well as broader sovereign debt
issues, the European pension landscape is set to alter dramatically over the
next five years and fund managers can expect to exploit significant opportu-
nities arising from this shift.
       Cerulli has assembled actionable information in two forms in the
Opportunities in European Corporate DC Pensions report. These are:


        • Qualitative information and analysis for an overview of the
European pension sector as well as opportunities arising in the DC segment.
The coverage includes comparable regional analysis as well as variation by
country; and likely future developments, in particular asset-gathering oppor-
tunities and potential roadblocks.
        • Quantitative analysis of investable and addressable pension assets
broken down by region and country, with forecasts up to 2014 based on
Cerulli’s research and modeling analysis. This is derived from a combination
of public information and proprietary data analysis.


      Cerulli Associates is one of a few international research firms to
conduct regular surveys and in-depth interviews with asset managers,



     Opportunities in European Corporate DC Pensions                      11
distributors, and regulators in more than 40 asset management markets
around the world, including Europe.
        Information in this report was obtained from public and non-confi-
dential sources, as well as proprietary interviews with asset managers and
pension funds, and survey work. Cerulli believes that the data herein is
reliable and has made every reasonable effort to verify statistics presented;
however, Cerulli does not guarantee its accuracy or completeness. All data in
this report is calculated and presented in euros and/or U.S. dollars, which
allows for comparative analysis. Exchange rates from December 2009 have
been used.
        Cerulli has benefited from the co-operation of a number of pension
funds and regulatory bodies in the region, and is especially grateful for
assistance from the following:


     • Committee of European Insurance and Occupational Pensions
       Supervisors (CEIOPS)
     • European Federation for Retirement Provision (EFRP)
     • The Pension Regulator, U.K.
     • Association of Consulting Actuaries, U.K.
     • L’Association Française de la Gestion Financière (AFG)
     • Ministère du Travail (France)
     • Commissione di Vigilanza sui Fondi Pension, COVIP (Italy)
     • Dutch National Bank
     • ATP Livslang Pension (Denmark)
     • Första AP-fonden (AP1), Andra AP-fonden (AP2), Tredje AP-fonden
       (AP3), Fjärde AP-fonden (AP4) (Sweden)
     • Fondbolagens Förening (Sweden)
     • Premium Pension Authority (Sweden)
     • Polish Financial Supervision Authority
     • Association of Pension Funds Czech Republic
     • Hungarian Financial Supervisory Authority
     • Office fédéral de la statistique (OFS) (France)
     • Telegraph Staff Pension Plan (United Kingdom)


12                            Opportunities in European Corporate DC Pensions
                          REPORT SCOPE


                 Beneficiaries of this Study

        The primary beneficiaries of this research are global asset
management firms and pension industry service providers requiring high-
quality information on the evolving European pension fund marketplace. The
study provides a roadmap for industry players to navigate the challenging
pension industry, with a combination of qualitative and quantitative analysis.
Local and international firms already operating in the sector will also find the
report useful.


                         Report Roadmap

       Opportunities in European Corporate DC Pensions has four chapters:


   • Background to DC Pension Plans provides an overview of the
     European pension fund marketplace for fund managers to analyze the
     opportunities from three fundamental aspects namely, market sizing and
     flows, product development, and competitive analysis.
   • Key Regions digs deeper into the asset-gathering opportunity by
     country and identifies opportunities and challenges for fund managers
     to develop a country- or region-specific pension strategy.
   • Moving Toward DC Pensions in Europe drills into the design of DC
     products and analyzes the pros and cons of various methods of creating
     default funds. It also looks at how changing regulations will have an
     impact on both the accumulation and decumulation phases.
   • The Future of DC Pensions in Europe wraps up the discussion by
     identifying key drivers and obstacles to the development of the
     European DC pension industry. It also looks at Cerulli’s projection of
     the future growth of DC pension assets.




     Opportunities in European Corporate DC Pensions                         13
     SAMPLE SECTION
          from

   THE CERULLI REPORT:
OPPORTUNITIES IN EUROPEAN
CORPORATE DC PENSIONS 2010
                        EXHIBIT 4: EUROPEAN CONTRIBUTIONS BY COUNTRY,
                        2004–2008 (€ BILLIONS)

                         Country              2004     2005     2006     2007      2008
                         United Kingdom        39.3     46.9     52.1     54.1      44.0
                         Switzerland           22.9     24.6     26.1     29.9      30.3
                         Netherlands           22.4     25.0     23.5     24.9      27.2
                         Sweden                18.8     19.7     22.7     21.2      22.7
                         France                 8.0      8.7      9.8     10.8      12.2
                         Czech Republic         3.2      3.9      4.7      6.4       7.4
                         Germany                3.9      5.1      5.8     17.2       7.3
                         Spain                  6.0      6.6      7.1      6.8       6.2
                         Poland                 2.2      3.1      3.5      4.4       6.1
                         Italy                  2.8      2.5      3.3      3.9       4.3
                         Hungary                1.0      1.2      1.4      1.1       2.0
                         Denmark                0.9      0.9      0.9      1.1       1.3


                        Sources: OECD, Various data feeds, Cerulli Associates



                                The problem is not confined to the United Kingdom. In a March 2010
                        survey, Workplace pensions – Defined Contribution, from the European
     Only five of the   Federation for Retirement Provision (EFRP), only five of the defined contri-
   DC schemes had
                        bution (DC) schemes had average contribution rates exceeding 10% of
average contribution
    rates exceeding     wages.
      10% of wages
                                Similarly, while the need to take investment risk, particularly in the
                        early years of retirement saving, is well established, in broad terms European
                        pension funds became more conservative between 2004 and 2008. In 2008,
                        European pension funds invested primarily in bonds (34%), shares (20%),
                        and mutual funds (18%), with allocations to cash and real estate remaining
                        relatively small at 3.9% and 3.2%, respectively.

                        EXHIBIT 5: BREAKDOWN OF TOTAL EUROPEAN PENSION
                        INVESTMENT ALLOCATION, 2004–2008

                                                               2004       2005      2006     2007    2008
                         Bills and bonds                       30.6%      26.7%     27.1%    29.8%   33.8%
                         Shares                                34.9%      37.5%     36.5%    26.7%   20.1%
                         Mutual funds (CIS)                    12.3%      13.6%     14.3%    19.3%   18.2%
                         Other investments                      5.2%       5.6%      5.7%     7.8%   10.5%
                         Loans                                  5.1%       4.6%      4.3%     4.4%    5.4%
                         Unallocated insurance contracts        4.2%       4.6%      4.4%     4.7%    4.3%
                         Cash and deposits                      3.2%       3.0%      3.5%     3.5%    3.9%
                         Land and buildings                     4.5%       4.0%      3.7%     3.2%    3.2%
                         Private investment funds               0.0%       0.4%      0.4%     0.6%    0.6%


                        Sources: OECD, Cerulli Associates
                        Note: France is not included in the calculations for this exhibit.




                        22                                     Opportunities in European Corporate DC Pensions
EXHIBIT 16: OVERVIEW OF EUROPEAN OCCUPATIONAL
PENSION FUNDS

Type of Scheme                        Countries
Mandatory for workers                 Bulgaria, Denmark, Hungary, Poland, Romania, Slovakia, Sweden
Auto-enrolment for workers            Italy
Mandatory for employers               Austria, Iceland, Norway, Switzerland
Quasi-mandatory for employers         Denmark, Netherlands, Switzerland
Employer required to provide access   Germany, Ireland, United Kingdom
Voluntary                             Belgium, Czech Republic, Finland, France, Portugal, Slovenia

Sources: European Federation for Retirement Provision, AP Information Services



        According to the EFRP, eight countries in Europe have coverage by
mandatory or workplace DC pensions that exceeds 50%: Austria, Bulgaria,
Denmark, Hungary, Iceland, Poland, Sweden, and Switzerland. It should be
noted that these figures exclude DB plans. Almost full coverage is achieved
in the Netherlands, Sweden, and Switzerland once DB plans are included,
with Ireland at 40%, the United Kingdom at 48%, and Germany at 65%.

    The Netherlands and the United Kingdom

       These countries have so-called Beveridgean pension systems, where
the aim of the state pension has historically been to prevent poverty rather
than to provide a substantial income in retirement. Both countries have
substantial coverage by occupational DB schemes, but coverage is highest in
the Netherlands, where it reaches almost 100%. The move to DC is underway
in both countries, but the pace is considerably slower in the Netherlands,
where the cultural attachment to DB pensions is stronger than in the United
Kingdom.

United Kingdom
        Despite some retrograde steps in terms of fiscal incentives, the United
Kingdom is the European corporate DC market with the most immediate
potential. Pension assets are high in the United Kingdom; thus, even a small
percentage switch from DB to DC creates a substantial opportunity.                                U.K. pension assets
                                                                                                  are the highest in
Furthermore, the switch to DC has achieved a degree of cultural acceptance not                    the region, thus
seen in other European markets, such as the Netherlands and Germany. The                          presenting the
                                                                                                  greatest opportuni-
development of DC platforms is also advanced in the United Kingdom, with                          ties, competition
the likes of Aegon, AXA, Fidelity, and Standard Life among others having                          notwithstanding




      Opportunities in European Corporate DC Pensions                                       43
        Because of the importance of mandatory schemes, voluntary
employer-financed plans have historically been confined to executives.
However, the tax-efficient savings account known as the Plan d’Epargne
Entreprise (PEE), introduced in 1967 with voluntary employer contributions,
was adopted by many companies. In its 2004 pension reforms, the French
government amended the life span of this plan from 10 years to “until
retirement”, turning it from a savings scheme into a pension product. The
2004 reforms brought in the same change for the Plan Partenarial d’Epargne
Salaire Volontaire (PERCO), introduced in 2001.

EXHIBIT 31: OVERVIEW OF THE FRENCH PENSION SCHEMES
PERCO, PERE, AND PERP

Pension          Type       Implemented       Beneficiaries     Contributions      Funds               Exit Option
Scheme                                                                           Management
PERCO         Voluntary,    Company or        All employees    Voluntary         Supervisory   On retirement (possible early
(Plan         corporate     industry level,                    employee/         board         redemption under certain
d’épargne                   collective                         employer                        circumstances); taxable life
retraite                    agreement                          contributions,                  annuities or lump sum
collectif)                                                     possibility of
                                                               transfer of
                                                               assets from PEE

PERE          Voluntary,    Company or        Frequently for   Compulsory        Insurance     On retirement only; taxable
(Plan         corporate     industry level,   managers         company           company       life annuities
d’épargne                   collective                         contributions,
pour la                     agreement                          compulsory/
retraite                                                       voluntary
d’entreprise)                                                  employee
                                                               contributions

PERP          Voluntary,    Individual level All individuals   Voluntary         Insurance     On retirement only; taxable
(Plan         individual,                                      contributions     company       life annuities
d’épargne     life
retraite      insurance
populaire)


Source: Allianz Global Investors



        This, combined with tax changes that made employer contributions
tax-free up to 10% of the employees’ earnings with a cap of eight times the
                                                                                                       Tax incentives for
social security ceiling, has led to an upsurge in pension saving, particularly                         employer contribu-
through PERCO.                                                                                         tions have led to an
                                                                                                       increase in PERCO
                                                                                                       assets




      Opportunities in European Corporate DC Pensions                                           57

				
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