1. Pension systems in developing European countries Miroslav Marinov Deputy CEO&CFO PAC “DOVERIE” CEE

2. Content Macroeconomic framework Equity markets performance YTD 2008 Regional pension systems Some lessons

3. Macroeconomic Indicators National Bank of Romania - www.bnro.ro People’s Bank of Republic of Macedonia - www.nbrm.gov.mk Bulgarian National Bank - www.bnb.bgwww.bnb.bg Central bank of Croatia - http://www.hnb.hr/eindex.htmhttp://www.hnb.hr/eindex.htm National Bank of Serbia - http://www.nbs.yu/export/internet/english/http://www.nbs.yu/export/internet/english/ Central Bank of the Republic of Turkey - http://www.tcmb.gov.tr/yeni/eng/http://www.tcmb.gov.tr/yeni/eng/ Bloomberg LP

4. Equity market performance YTD 2008 IndexDow Jones (US) DJ Stoxx 600 (Europe) Nikkei (Japan)MSCI World 2008 YTD -39.34%-50.05%-48.32%-49.97% Major world indices*: IndexSofix (Bulgaria) ISE 100 (Turkey) BELEX 15 (Serbia) CROBEX (Croatia) BET (Romania) MBI 10 (Macedonia) 2008 YTD -80.98%-60.45%-75.74%-67.29%-70.60%-70.55% Regional indices*: Date: 21.11.2008 Source: Bloomberg (Local Currency returns) MBI 10 - http://www.mse.org.mk/default.aspx

5. Regional pension systems All regional pension systems are moving towards a multi-pillar model with private defined contribution pillars The reforms are driven mostly by demographic pressures with exception of Turkey Capital market is most advanced in Turkey, which favors the development of such systems The systems in the region tend to be in the initial stages in developments The reforms appear most advanced in Bulgaria and Croatia

6. Romania's private pension system The system is based on multi-pillar model. Young private pension system. Pension insurance based on defined contributions. Start of contribution collection for mandatory pensions is June 2007 and for voluntary pensions is May 2008. Mandatory pension funds are managed by pension management companies. Each company must only manage one fund. Voluntary pension funds are managed by pension management companies, life insurance companies or asset management companies. Each pension /life insurance /asset management company can manage as many funds as they wish. Pension funds can have one of the possible 3 risk profiles: low/ medium/ high risk. There is fund investment limitations but pension funds can invest all their assets abroad.

7. Romania's private pension system www.privatepensions.ro

8. Pensions system in Republic of Macedonia The system is based on multi-pillar model. Undeveloped pension system. Pension insurance based on defined contributions. There are yet no authorized pension company to manage voluntary pension funds. The ministry of Labor and Social Policy and the Agency for Supervision of Fully Funded Pension Insurance are responsible for the promotional activities for the third pillar. Each pension company must only manage one voluntary pension fund. Small competition in mandatory pension insurance. There are only 2 mandatory pension funds and 2 pension companies. The two pension companies manage one pension fund each, and their approvals for pension fund management are granted for a 10-year period. Each pension company must only manage one mandatory pension fund.

9. Mandatory pension insurance in Republic of Macedonia www.mapas.gov.mk

10. Pension system in Republic of Bulgaria The system is based on a multi-pillar model. Pension insurance based on defined contributions. There are two kind of mandatory pension funds: Professional pension funds and Universal pension funds. Each pension insurance company must only manage one voluntary, one professional and one universal pension fund. Big competition in pension insurance market. Start of voluntary pension funds with occupational schemes. Process of establishing multi funds in voluntary pension insurance

11. Private pension system in Bulgaria Bulgarian financial supervision commission -www.fsc.bg

12. Pension system in Republic of Turkey The system is based on a multi-pillar model The system consists of the mandatory state pay-as-you-go system and a private pension system available freely to all citizens since 2002 Employers in Turkey can set up pension plans for their employees The private system consists of variable risk-profile funds to satisfy the insured persons’ time horizon and risk tolerance needs The system consists of 10 licensed pension companies managing a total of 110 pension funds. The private system is expected to develop rapidly due to the demographic profile of Turkey consisting of younger than average population The private system is still characterized as underdeveloped with low penetration rates

13. Private pension system in Turkey Total number of funds115 Total number of investors4.92 million* Total assets under management5.80 billion TRY Approx – 3.24 billion EUR Statistics available as of September 2008: *A single person can be counted as an investor more than once depending on the number of funds he is invested in Central Bank of the Republic of Turkey - http://www.tcmb.gov.tr/yeni/eng/http://www.tcmb.gov.tr/yeni/eng/ Capital markets board - http://www.spk.gov.tr/index.aspx

14. Pension system in Republic of Croatia The pension system is based on a multi-pillar model The pension system exists in its present form since 2002 The system consists of three pillars: State pay-as-you-go system Private mandatory system – all citizens under 40 when the system was put in place Private voluntary system Relatively concentrated market with only 4 mandatory funds and 6 open-end voluntary funds The voluntary system (third pillar) is still relative undeveloped, while the mandatory system has a high degree of market penetration

15. Private pension system in Croatia Mandatory fundsOpen-end voluntary funds Closed-end voluntary funds Number of funds 4614 Number of investors 1 462 728124 43016 338 Assets under management 21 896 004 th. HRK Approx. 3.06 billion EUR 735 008 th HRK Approx. 103 million EUR 132 287 th. HRK Approx 18.5 million EUR Average assets per investor 14 969 HRK Approx. 2 100 EUR 5 907 HRK Approx. 825 EUR 8 097 HRK Approx 1 131 EUR Data as of October 2008: Central bank of Croatia - http://www.hnb.hr/eindex.htmhttp://www.hnb.hr/eindex.htm Croatian Financial Services Supervisory Agency - http://www.hanfa.hr/index.php?LANG=ENG

16. Pension system in Republic of Serbia The pension system in Serbia is based on a multi-pillar model The system consists of two pillars State pay-as-you-go system Voluntary fund system (third pillar) Absent is a mandatory private system (the second pillar) due to lack of funding for the state run first pillar. Transition cost is still deemed too high on the fiscal budget and current retirees The voluntary funds were allowed in 2002, however they were not properly regulated and did not start effectively operating till 2005 The private system is still undeveloped with low penetration rates The market is concentrated with 3 pension companies having approximately 70% market share

17. Private pension system in Serbia Number of voluntary funds10 (Managed by 9 pension companies) Number of investors194 955 pension contracts 147 677 unique investors Total assets under management3.72 billion RSD Approx 49 million EUR Average assets per unique investor25 183 RSD Approx 330 EUR Data as of June 2008 : National Bank of Serbia - http://www.nbs.yu/export/internet/english/

18. Current turmoil and political actions – heading to the right direction? Argentina takes control over private pensions Lithuania to cut private pensions contributions from 5.5% to 3% ABP rises contributions by 0.4% What is next?

19. Some lessons Financial markets are unpredictable and highly volatile RISK vs. Reward and Fear vs. Greed Too-big-to-fail vs. Too-big-to-save When there is excess credit, the excess CASH is king Financial theory and equations simply do not work in a turmoil Financial world is not only….

20. Bulls

21. Bears

22. But also….The Black Swan – the impact of highly improbable

23. THANK YOU FOR YOU ATTENTION Q&A Disclaimer: This communication is provided for information and discussion purposes only. It does not constitute an offer or solicitation to purchase or sell any financial instruments. The information contained in this communication is based on generally available and, although obtained from sources believed by the author to be reliable, its accuracy and completeness is not guaranteed. This communication is not intended to forecast or predict future events. Past performance is not a guarantee or indication of future events. This communication contains data compilations, writings, information and photos that are proprietary to respective owners and if protected under copyright and other intellectual property laws, it may not be redistributed or otherwise transmitted by you to any other person for any purpose.