Investment Restrictions

A European

Perspective

European Pension Fund AssetsCountry Population in

millionsTotal PensionAssets ($bn)

PensionAssets as a %

GDP

Pensionassets per cap

($000s)Austria 8.1 8 4% 1.0

Belgium 10.2 26 10% 2.5

Denmark 5.3 166 89% 31.2

Finland 5.2 41 31% 7.9.

France 58.8 95 6% 1.6

Germany 82.3 286 12% 3.5

Ireland 3.7 35 43% 9.7

Italy 57.7 195 19% 4.3

Netherlands 15.7 558 141% 35.5

Norway 4.4 39 24% 8.9

Portugal 10.0 12 10% 1.2

Spain 39.4 26 4% 0.7

Sweden 8.9 226 90% 25.3

Switzerland 7.1 286 105% 40.3

UK 59.1 1241 90% 21.0

Source: William M Mercer

European Pension Fund Assets

0%

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Nethe

rland

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Sweden UK

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Belgium

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Pension Assets as a % GDP

The “Prudent Person” Countries

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Pension Assets as a % GDP

Prudent Person Characteristics

• Separation of assets• Role of trustees• Self investment limits (eg 5%)• Concentration of investment limits (eg 10%)• Statements of Investment Policy and Objectives

Supported by disclosure/minimum funding standards

The Lightly Restricted Country!

0%

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Pension Assets as a % GDP

The Most Restricted Countries

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Pension Assets as a % GDP

Summary of Restrictions

Country Maximum EquityLimit

Denmark 50%

Norway 35%

Italy 20%

Germany 20% to 25%

Portugal 50%

France 40% to 50%

Austria 40% to 50%

Equity Content by Country

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Pension Assets as a % GDPEquity %

Reasons for Equity Variations

Restrictions but also

• Absence of equity culture in many Continental countries

• Underdeveloped domestic capital markets

Things are changing rapidly

• New Pensions Directive

Investment Restrictions

A European

Perspective