1. Declining funding ratios D. Wenting AFIR 2003

2. Funding levels  1999150%  2000140%  2001125%  2002105%

3. Instruments for steering  Pension plan  Compensation for inflation  Contributions  Investment policy

4. Input for projection of funding, situation end year 2000  Funding ratio 140  Reduction (refund) on contribution 40%  Discount rate for the present value liabilities 4%  Nominal long term interest rate 5%  Inflation rate 3%  Equities in the asset mix: 40%

5. Projection of funding in next 20 years

6. Jacking up the funding from an actual 105% to 120%: contributions 100% cost price postpone inflation compensation

7. After reaching the level of 120%, funding is sinking back again

8. Reasons funding is not holding  Negative real return on investments  Baby boomers  Contribution is not high enough to keep the surplus relative in shape

9. How to maintain the level of 120%  Lower the target for indexation of the liabilities from wage inflation to price inflation (let us assume this makes a difference of 1% indexation)  Add around 10% to the contribution level for several years, to create an extra surplus  Add some 1% yearly to the level of contribution to keep up with future demographical developments (baby boomers)

10. Projections of future funding from the level of 120% on

11. Probabilities of under funding, initional funding level 120%

12. Alternative portfolios

13. Probabilities of under funding, portfolio risk, using alternative portfolios