1. Do not put content on the brand signature area Leszek Jedlecki ING Investment Management (Poland) S.A. Changes in pension system and their impact on asset management/investment funds industry 28th October 2011 – Kyiv Workshop

2. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management2 1.History 2.Asset Managers a)Pension Funds b)Investment Funds 3.Impact of Pension Fund Reform on the Market 4.Pension System Status 5.Challenges and Opportunities Agenda

3. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management3 1.History 2.Asset Managers a)Pension Funds b)Investment Funds 3.Impact of Pension Fund Reform on the Market 4.Pension System Status 5.Challenges and Opportunities Agenda

4. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management4 How it started in Poland? Milestones Polish capital market traditions go back to 1817, when Warsaw Mercantile Exchange was opened (12 May 1817). In 1938 130 equities were quoted on the Warsaw Stock Exchange (Warsaw generated 90% of country’s turnover, 6 other stocks only 10%). 1945 – unsuccessful attempts to re-open the Warsaw Stock Exchange. March 1991 - the Securities Trading & Trust Fund Act was passed by Parlament. April 1991 - the first session on the new Warsaw Stock Exchange. July 1992 - the first Polish investment fund was launched (Pioneer TFI). January 1999 - the reform of Pension System started.

5. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management5 1.History 2.Asset Managers a)Pension Funds b)Investment Funds 3.Impact of Pension Fund Reform on the Market 4.Pension System Status 5.Challenges and Opportunities Agenda

6. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management6 Mandatory second pillar of the pension system PLN 236,9 bln (€ 59,2 bln) of AuM Equity holdings amount to 15.2% of Polish market capitalization Legal owner of mutual fund PLN 119.2 bln (€ 29,8 bln) of AuM (retail and special funds) Equity holdings amount to 7.7% of Polish market capitalization Responsible for managing funds according to given mandate Often offers investment advisory services Discretionary porfolios management PLN 8.6 bln (€ 2,2 bln) Polish asset management industry Who is who? Open Pension Funds (OFE) 65% AuM Mutual Funds Asset Managers 2% AuM Investment Funds Corporations (TFI) 33% AuM Dual company structure Source: IZFiA, Citi Investment Research and Analysis, Parkiet (30 June 2011)

7. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management7 Source: Analizy Online on the basis of data of NBP, GUS, TFI and PTE Structure of savings In which instruments is the money invested? Equities ( 4.9%) Unit-linked funds (4.0%) Domestic (retail only) mutual funds (8.0%) Foreign mutual funds (0.4%) Open pension funds (25%) Bonds and bills (1%) Cash in circulation outside banking system (10.1%) Bank deposits (46.6%) Assets distribution among investment vehicles as of June 30, 2011 (in bn PLN) 06 2000 06 2001 06 2002 06 2003 06 2004 06 2005 06 2006 06 2007 06 200806 200906 2010 06 2011 Overall savings are increasing (within the last 10 years they increased by more than PLN 600 bln (€ 150 bln), i.e. three times). As of June, 2011 overall savings amounted to PLN 946 bln (€ 236,5 bln).

8. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management8 mandatory I PILLAR Public and administered by the public institution: ZUS – polish social security institution, contribution 12,2% (+5%) of gross wage II PILLAR Public and administered by private institutions: OFE – Open Pension Funds, contribution 7,3% (-5%) of gross wage III PILLAR Administered privately source: FSA voluntary IKE - Individual Pension Accounts EPP- Employee Pension Programs = 40-60% of the wages received at the moment of getting retired = alternative that allows people to maintain at retirement the previous standard of living = alternative that allows people to maintain at retirement the previous standard of living Polish pension system IV PILLAR (not supervised) Individual retirement savings Investment Employee Programs

9. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management9 Polish pension funds Market development since 1998 Source: KNF, Citibank. Assumed exchange rate for EUR/PLN = 4,00

10. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management10 Polish pension funds AuM (in mln PLN) by fund provider Q2 2011 Source: KNF. Assumed exchange rate for EUR/PLN = 4,00

11. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management11 1.History 2.Asset Managers a)Pension Funds b)Investment Funds 3.Impact of Pension Fund Reform on the Market 4.Pension System Status 5.Challenges and Opportunities Agenda

12. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management12 Polish investment funds Market development since 1991 Securites Trading & Trust Funds Act Pioneer monopoly Mutual Funds Act Capital Gains Tax Introduction Global Financial Crisis Source: IZFiA. Assumed exchange rate for EUR/PLN = 4,00

13. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management 13 Fund managers in Poland AuM (in PLN mln) by Fund Provider Q2 2011 13 6 out of 35 TFIs hold 56% of the market share Polish mutual fund market is expected to grow steadily due to above average economic growth, rising pension contributions and low current level of wealth allocation to mutual funds. Total AuM of Polish mutual funds: PLN 119.1 bln (€ 29.8 bln). Total AuM of foreign mutual funds constitute 3.3% of assets gathered in domestic funds and amount to PLN 4.1 bln (€ 1 bln). Concentrated market: 6 out 35 asset managers have over 56% of market share. Source: Analizy Online as of June 30, 2011 Assumed exchange rate for EUR/PLN = 4,00

14. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management14 Source: Citigroup Global Markets Poland – Investment Fund Strategy, EFAMA, IZFiA What are the most popular strategies? Structure of investments in EU mutual funds in EUR mln Structure of assets

15. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management15 Polish market versus Europe and CEE Poland – strong position in CEE AuM in CEE amount to roughly 1% of the total European market

16. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management16 1.History 2.Asset Managers a)Pension Funds b)Investment Funds 3.Impact of Pension Fund Reform on the Market 4.Pension System Status 5.Challenges and Opportunities Agenda

17. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet Impact of pension fund reform on the market The reform of Pension System in 1999 had a key role in development of asset management industry in Poland. The reform created strong institutional local asset managers. Local institutional investors played important role during privatization process. AuM of investment and pension funds increased from 5.5 bln PLN in 1999 to 355.9 bln PLN in mid 2011. Polish capital market is less dependent on foreign capital. Polish local institutional investors are key players on the Warsaw Stock Exchange. As of June 30, 2010 it was the largest national stock exchange in CEE and one of the fastest-growing exchanges in Europe among both regulated and exchange-regulated markets. ING Investment Management17

18. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet Impact of pension fund reform on the market Total assets in pension and investment funds ING Investment Management18 Source: Polish FSA, Analizy Online

19. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management19 1.History 2.Asset Managers a)Pension Funds b)Investment Funds 3.Impact of Pension Fund Reform on the Market 4.Pension System Status 5.Challenges and Opportunities Agenda

20. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management20 Pension system status Aging population with lowering pension benefits. Governments will not able to keep present replacement rate. People should take care about their pensions themselves. Governments should boost (mainly by tax incentives and education) development of voluntary pension schemes. Growing awareness in Polish society about necessity for additional savings for pension (especially 40+ age).

21. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management21 Source: ZUS, Departament Statystyki, "Ważniejsze informacje z zakresu ubezpieczeń społecznych", Warsaw 2009 2002200320042005200620072008 Pension in PLN999,77 zł1 051,09 zł1 096,97 zł1 127,23 zł1 214,75 zł1 251,74 zł1 370,81 zł Pension vs. average remuneration in % 1 63,70%65,00% 63,60% 59,20%57,10% 1 minus obligatory insurance contribution paid by insrured Pension system status Average monthly pension paid by ZUS

22. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management22 Source: Population projection for Poland for 2008 – 2035 Główny Urząd Statystyczny, Departament Badań Demograficznych, Warsaw 2009 2007200820092010201520202520302035 18-59/6424 54524 58424 60024 57123 718 22 50321 625 21 25420 739 60+/65+6 0826 1866 2956 414 7 380 8 368 8 997 9 2899 622 Increase of percentage of the population at post- working age 60+/65+ Decrease of percentage of the population at working age 18-59/64 Decrease of percentage of the population at working age 18-59/64 Pension system status Population projection by economic age group (in percentage)

23. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management23 1.History 2.Asset Managers a)Pension Funds b)Investment Funds 3.Impact of Pension Fund Reform on the Market 4.Pension System Status 5.Challenges and Opportunities Agenda

24. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management24 Impact on Polish capital market: less money will be invested in stocks by pension funds reputation risk of Poland Adverse change in savings structure – risk of real loss Uncertainty about future pensions Step back from public consensus solution from 1999 Weaker impact of pension funds on future pensions may lead to greater interest in 3rd pillar’s solutions (PPE, IKE, IKZE - voluntary pension savings) which are offered by investment funds managers Pension funds may have more than one investment strategy CHALLENGES OPPORTUNITIES Pension reform poses threat to Polish equity market. On the other hand it may lead to bigger demand for 3rd pillar products. The latest reform of pension funds system limited the amount of money transferred to 2nd pillar from 7.3% to 2.3% of salary. Challenges & opportunities Pension sector reform

25. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management25 CHALLENGES OPPORTUNITIES For now, there are no strong incentives for people to save in 3rd pillar (example tax deduction) Uncertain future pensions Great potential for growth in 3rd pillar products (according to PwC 20% of German and 13% of Finnish population participates in voluntary pension savings plans) Assets in 3rd pillar products are more „sticky” than the regular funds savings We see a great potential in 3rd pillar products as Poles will become more aware of need for saving for their retirement. Voluntary pension savings (3rd pillar) consists of individual pension acc. and employees retirement plans. Nowadays, only 7.3% of Poles have savings in them. Low generation renewal – ageing population Source: GUS Source: Gazeta Wyborcza, Hewitt Challenges & opportunities Voluntary pension savings

26. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management26 Challenges & opportunities Voluntary pension savings In Poland despite access to voluntary pension schemes, penetration is still very low: 1.PPE – Employee Pension Schemes. Started in 1999. Penetration at 1.2% (PwC 2010). The main reason is not enough pressure on employers and bureaucracy 2.IKE – Individual Pension Account. Started in 2004. Penetration at 3% (PwC 2010). IKE grants tax benefits deferred in time. 3.IKZE – Individual Pension Protection Account. New program, will be launched on 1/01/2012. It grants immediate tax benefit. Total penetration in Poland amounts to 4.2% of working population which is very low in comparison to other countries: 32% in Hungary, 20% in Germany and 18% in Slovakia (PwC 2010).

27. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet PPE Market in Poland ING Investment Management27 Source: Polish FSA

28. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet IKE Market in Poland ING Investment Management28 Source: Polish FSA

29. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING29 Potential IKZE market Source: Money.pl, PwC Comparison of systems of additional pension protection in Poland and othe UE countries, ZUS 24.1 mio people 1st tax threshold 0.34 mio people 2nd tax threshold 12 x Avg. Salary * 4% 100 000 PLN * 4% Assuming 100% penetration = 41.1 bln PLN according to PwC current penetration in 3rd pillar in Poland amounts to 4.2% (1.73 bln PLN). if penetration rises to level of: Slovakia 18% - 7.4 bln PLN Germany 20% - 8.2 bln PLN Hungary 32% - 13.2 bln PLN

30. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management30 Thank You

31. Do not put content on the brand signature area Orange RGB= 255,102,000 Light blue RGB= 180,195,225 Dark blue RGB= 000,000,102 Grey RGB= 150,150,150 ING colour balance Guideline www.ing-presentations.intranet ING Investment Management31 Disclaimer Niniejszy materiał został przygotowany przez ING TFI przy dołożeniu należytej staranności i zgodnie z jego najlepszą wiedzą oraz przekonaniami. Wszelkie informacje zawarte w niniejszym materiale pochodzą ze źródeł własnych ING TFI lub źródeł zewnętrznych uznanych przez ING TFI za wiarygodne, lecz nie istnieje gwarancja, iż są one wyczerpujące i w pełni odzwierciedlają stan faktyczny. ING TFI nie może jednak zagwarantować poprawności i kompletności informacji zawartych w niniejszym materiale i nie ponosi żadnej odpowiedzialności za szkody powstałe w wyniku jego wykorzystania niezgodnie z jej przeznaczeniem. Wszelkie opinie i oceny wyrażane w niniejszym materiale są opiniami i ocenami ING TFI lub jej doradców będącymi wyrazem ich najlepszej wiedzy popartej informacjami z kompetentnych rynkowych źródeł, obowiązującymi w chwili jej sporządzania. Mogą one podlegać zmianie w każdym momencie, bez uprzedniego powiadomienia. Niniejszy materiał ma charakter wyłącznie informacyjny i został sporządzony wyłącznie dla tego celu do wyłącznego użytku adresata. Nie stanowi on oferty, doradztwa inwestycyjnego ani rekomendacji kupna lub sprzedaży instrumentów finansowych, nie zwalnia adresata z konieczności dokonania własnej oceny. Informacje zawarte w niniejszym materiale nie mogą stanowić podstawy do podejmowania decyzji inwestycyjnych.