Nicolas Jeanmart Head of Macro-Economics, Life & Pensions, INSURANCE (BELGIUM) Friday,

Securing the future of pensions: The growing importance of supplementary pension funds 15 th Hydra conference 26 – 28 September2013

Insurance Europe 3 Who? What? Why? European insurance and reinsurance federation, founded in 1953 Represents around 95% of European insurance market by premium income Committed to creation of favourable regulatory and supervisory framework for insurers at European and international level.

Members 34 national associations 27 EU member states 5 non-EU markets Switzerland, Iceland, Norway, Turkey, Liechtenstein 2 associate members Serbia, San Marino 3 partners Russia, Ukraine, Kosovo 4

Contribution to the economy 5 Insurance Europe represents more than European (re)insurers, which: generate premium income of more than €1 100bn employ almost one million people invest almost €8 400bn in the economy

Publications 6 Funding the future: insurers’ role as institutional investors How insurance worksEuropean Insurance in Figures Annual Report The impact of insurance fraud Indirect taxation on insurance contracts in Europe

What is on our agenda? 7 Omnibus II Solvency II Pensions IORP review IAIS ComFrame Anti-discrimination Stability issues SIFIs Data protection Financial conglomerates ADR Collective redress Accounting EMIR FTT Savings tax FATCA Climate change Natural catastrophes PRIPs IMD MiFID Anti-money laundering Credit rating agencies ELD Offshore oil safety

Introduction Pensions - overarching objectives:  Guaranteeing the adequacy of pensions benefits  Guaranteeing the sustainability of national pensions systems 8

Pensions’ adequacy 9

Pension systems in Europe : adequacy of pension revenue 10 Data Source : OECD Pensions at a glance 2011

11 Longer life expectancy and falling birth rates: How to address the problem of under-provision in retirement? According to a study, across the EU, the annual pensions gap stands at €1 900bn (or 19% of 2010 GDP). The most affected countries would be the UK (€ per capita each year) and Germany (€11 600/cap.) This analysis also reveals that no single reform can close the gap completely on its own; non pension- assets may only fill as little as 20% of the pensions gap. (Source: Aviva) Pension systems in Europe : adequacy of pension revenue

Pensions’ sustainability 12

Pension systems in Europe : Sustainability 13 Data Source : OECD Pensions at a glance 2012

Multi-Pillar systems are the solution No pillar on its own can respond to the challenges of the coming decades Multiple pillar systems allow for better distribution of the risks (demographic vs economic) Possible to distinguish between the goals of poverty reduction and income replacement Pension reforms decreasing first pillar pension pay-outs could be countered by additional supplementary retirement income 14

Finding the right balance 15

Pensions systems in Europe : three pillars 16 Data Source : Insurance Europe

Supplementary pension schemes 17 Data Source : Insurance Europe

Second pillar across Europe 18 Data Source : Insurance Europe

Supplementary pensions : EU regulatory developments Review of the IORP Directive: level playing field between the different occupational pension providers Same risks, same rules Workstreams on personal pension products (PPPs) Is their a need for a single market for PPPs? European Commission (EC) aims for enhanced consumer protection Insurance Europe is strongly engaged in discussions on possible regulatory pension changes with EIOPA and the EC 19

For more information