Macedonia Pension Reform Implementation Agency for Supervision of Fully Funded Pension Insurance Zorica Apostolska Director Agency for Supervision of Fully Funded Pension Insurance Sofia, February 16, 2005

Agenda Brief Summary of Macedonian Pension System Design Mapas Functions Pension Reform Implementation Strategy Completed Tasks Tender Process Requirements for participating on the Tender Current Tender Status Remaining Tasks Time Table

Brief Plan Design Summary (1) Three-pillar system 20% total contribution; 7% contribution to fully funded system Two Pension Companies selected by international tender Exclusive 10 years license Each Pension Company forms only one Pension Fund

Brief Plan Design Summary (2) Workers hired on or after January 1, 2003 must participate in new system Those hired before have option to participate Centralized contribution collection - PDIF (Pension and Disability Insurance Fund)

MAPAS Functions Regulates and Supervises the operations of Pension Companies and foreign asset managers Protect the interests of the Pension Fund Members Promote, organize and enhance the development of the fully funded pension insurance

Implementation Strategy Ministers Council –Makes key policy and political decisions –Chaired by Minister of Labor –Controls overall pension reform implementation strategy Working Group –All major institutions represented –Meets weekly –Manages overall implementation project USAID and World Bank assisting

Completed Tasks Secondary regulations issued Business processes designed for PDIF, MAPAS, Custodian Custodial unit established and staffed in National Bank Baseline survey for design of pub ed campaign completed

Tender Process International public tender for issuing licenses to establish two Pension Companies for Managing Pension Funds Licenses will be granted for period of 10 years The decision will be made for the two best offers in two stages: –Pre-qualification stage –Economic Bid Successful tender: number of Applicants that will successfully pre-qualify is less than three Organizing the Tender process

Requirements for participating on the Tender Domestic and Foreign legal persons The founders which would hold 51% of the share capital of a Pension Company shall be banks, insurance companies, pension companies and other licensed financial institutions Minimum required capital of 20 million Euros for each of the founders The founder should be at least 3 years solvent minimum investment grade level rating from S&P, Moody's Fitch or D&B Experience in asset management, particularly on experience in managing pension funds and experienced and qualified management

Current Tender Status Pre-qualification stage ended Economic bid stage ended Appeal process in progress Issuing licenses to establish two Pension Companies for Managing Pension Funds will follow after the ending of the appeal

Remaining Tasks Pension Company establishment, staffing, marketing and advertising, operations, sales agent examination and licensing etc. Public education campaign; assistance with switching decision and selection of Pension Fund Pension Funds enrollment Institutional preparation –Develop procedures and manuals –Completion and testing of new IT systems for PDIF, MAPAS, and Custodian –Training and internships

Time Table ActivityRealization period Issuing licenses to establish two Pension Companies End of February Establishing the Pension companies, preparation of the companies, marketing, membership June 2005 Other institutions operativeAutumn 2005 Splitting of contributions and first payment in the second pillar Autumn 2005

Acknowledgments Special gratitude to all our colleagues and collaborators on their unconditional support, advise and effort in sharing their experiences with us, which enabled us to arrive to the implementation stage THANK YOU!