Highlights of the National Conference on the Implementation of the Pension Reform Organized by National Assembly and PenCom 20 May, 20091

Background Diagnostic review of the implementation of the pension reform was carried out Views of various stakeholders on several aspects of the pension reform were discussed Further deliberations were held at syndicate sessions resulting in various recommendations Highlights of issues and recommendations are as follows 20 May, 20092

Issues and Recommendations Contribution Ratio  Contribution rates should be subject to negotiations Retirement age/life expectancy  The age for accessing retirement benefit to continue to be in accordance with terms of employment as currently provided for by the PRA 2004 Gratuity under the Contributory Pension Scheme  Gratuity should be subject to collective bargaining 20 May, 20093

Enforcement  PenCom to deploy an automated system for identifying defaulting employers  PenCom to workout modalities for direct invoicing of employers for contributions  PenCom to intensify public awareness campaigns  Create more deterrence and enhance the sanction regimes for defaulting employers Multiple Funds  The Commission to establish Multiple Funds 20 May, Issues and Recommendations …contd

 Paucity of Permissible Investment Universe  Broaden the universe (real estate, social infrastructure financing & private equity)  PenCom to support in the drive for tax efficient laws to promote REITs, RMBS & Bonds  Offshore investments not an option in the interim  Infrastructure Financing  Equity and/or debt to be allowed for social infrastructure projects  Social infrastructure to include: Provision of public services (hospitals, schools and housing) Projects that have direct impact on economic development (seaports, rail, airports, roads, water & electricity) Issues and Recommendations…contd 20 May, 20095

Issues and Recommendations…contd Pension Fund Investments  Investment of pension funds in infrastructure to be either through structured funds or direct participation in well conceived projects Risk Management  PenCom and operators to enhance risk management capabilities within the industry Legal Framework  All provisions of the PRA 2004 that violate the provisions of the Constitution to be brought in tandem with the Constitution  Section 5 of the PRA 2004 to be reviewed to allow State administration of estate laws to apply 20 May, 20096

Issues and Recommendations…contd  The current group life to be expanded to cover disability  Decisions taken by PenCom in dispute resolution to be taken to a Tribunal not Arbitration (Relationship between PenCom, IST & the Federal High Court to be harmonized) Government to ensure policy consistency and avoid reversals based on short term concerns The three levels of Government must reach an agreement of how to reach a common goal of contributions and finance all the accrued pension liabilities 20 May, 20097