The Trends and Challenges for Private Pension Funds Denise Lamaute Sofia, Bulgaria February 16-18, 2005

The Challenges Ahead 1.Maintaining the Integrity of the Reformed Pension System 2.Putting Beneficiaries First

Pension Reform Integrity Prudential regulation and supervision Unassailable financial, accounting, and record keeping systems Greater efficiency, reliability and transparency

Outside Forces Greater international diversification A stable and sustainable macroeconomic environment Balance between the regulators and pension funds Healthy competition to minimize the costs of managing retirement fund assets Participants becoming owners

International Issues EU Harmonization and Accession Corporate Governance Socially Responsible Investment (SRI) Adopting and Implementing International Standards and Best Practices

Putting Beneficiaries First Expanding Coverage to Informal Sector, Agricultural Workers, and Others Managing the Expectation of Participants Expanding Financial Literacy Education Programs Providing Greater Control and Choice to Participants

The TRENDS  Think Globally  Use More Technology

Adopt a Global Perspective The growth of pension assets having an enormous impact on capital markets globally An evolving financial landscape that exploits new global opportunities for greater returns with less risk (new securities) Internationally acceptable risk-management standards Industry focus on educating participants on their plan benefits and the basics of investing

Global Investing Home-country pension constraints lifted Country focus replaced with global sector focus Alternative investments – LBOs, Venture Capital, Hedge Funds, Derivatives Performance based fees

Technology Issues Continuous Investment in Upgrades and New Systems Customized portfolios and statements driven by technological advancements in recordkeeping, trading and reporting Faster, Faster, Faster and That’s Only the Beginning

Technology Horizon  Merging of Telephone, Computer, Internet, Satellite and Video  Real Time Everything  Easy Access  Greater Efficiency  Lower costs  Reliable Systems  Secure Transactions

In Summary The Challenge: Stability, Inclusion, Education and Efficiency The Trend: Global Perspective and Increased Technology

Thank you! Denise Lamaute