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Annuities & Regulation: a business point of view Tom Kliphuis,

Annuities & Regulation: a business point of view Tom Kliphuis, CEO of ING Insurance Central Europe Warsaw, 28 May 2009 International Seminar: “Investments and Payouts in Funded Pension Systems”. Introduction & some introductory remarks. M aster’s degree in Business Economics  

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Annuities & Regulation: a business point of view Tom Kliphuis,

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  1. Annuities & Regulation: a business point of view Tom Kliphuis, CEO of ING Insurance Central Europe Warsaw, 28 May 2009 International Seminar: “Investments and Payouts in Funded Pension Systems”

  2. Introduction & some introductory remarks • Master’s degree in Business Economics   • Head of Marketing – Nationale-Nederlanden Life • Regional Manager ING for Europe & South America • General Manager ING Afore (Mexican PF) • CEO of ING Chile • CEO ING Insurance Central Europe Tom Kliphuis, Pleased to meet you • Optimal regulation is necessary: pensions is about long-term savings • Trust is crucial; strong supervision supports to build trust • Regulation must create level playing field • Allow for sufficient assets in international stocks and bonds • Spread risks, less ‘over-investing’ in local economy, good investments is key (even more important than cost awareness) • Regulators must protect customers against too risky asset allocation • Pensions is spread business; hence insurers have pressure for risky assets • Regulation-imposed yield guarantees should be eliminated Banking - Investments - Life Insurance - Retirement Services

  3. Regulation should allow for flexibility in solutions • Allow people to make voluntary contributions to a mandatory system • To improve the conversion rate • With some tax incentives • To start the pay-out phase: allow for flexible timing since annuities depend heavily on interest rates on any given moment • Based on 1 or 2 lives • Lifelong annuities or with limited duration, no lump sum payments * source: Eurostat, 2006 Banking - Investments - Life Insurance - Retirement Services

  4. Some recommendations • Make sure there is a strong tax incentive for employees and employers • Create certain limits to commission for agents and brokers • Make it attractive enough for providers to make a profit • In Slovakia, DSS is not attractive • Do regular operational audits and ‘rate’ pension providers • E.g. for investment return, operational excellence, transparency Banking - Investments - Life Insurance - Retirement Services

  5. The system needs stability and consistent political support • Regulation should be independent of day-to-day politics • System needs stability, no volatility or opportunism • The Netherlands since 1980s • Changing of rules and legislation every 5 years • Constant change of regulations can have big impact on cost Banking - Investments - Life Insurance - Retirement Services

  6. Key messages • Create a level playing field • Allow for sufficient international assets allocation • Do regular audits and rate pension providers • The system needs stability ….. • ………..because pensions is all about trust Thank You for Your Attention Banking - Investments - Life Insurance - Retirement Services

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