DC MARKET ENTRY RESEARCHANONYMIZED SAMPLES

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INTRODUCTION

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This report offers the results of the primary and secondary research done by Hooplot Associates for States Street Global Advisors about the DC market entry in the Netherlands. Objective/goal as defined in research brief: Ø To identify real actionable insights which will help position XXX DC’s offering through

PPIs into the Dutch market.Outcome of this research as defined in research brief: • Segmented quantitative (survey based) and qualitative (small focus groups) insights on

possible SSGA market positioning and themes• View of competitor marketing and where we could land by comparison• Potential positioning for SSGA DC in NED

METHODOLOGY

Field research: During March-April 2017 , we gathered information from pension experts, corporates, media, politicians and unions through:• Interviews and panels with 10 experts and 14 corporates

• An online survey with corporates only (n=101 respondents) Focus groups participants and interviewees were selected based on invitee lists approved by XXXX.

Desk research:From November 2016 until April 2017 we gathered additional information (o.a. points of view of political parties and competitor information).

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EXECUTIVE SUMMARY AND CONCLUSIONS (1)

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The trend from DB to CDC to CiDC to iDCis unmistakable. The pace of transition is up for debate. Expectations: volume in absolute terms will more then double from 2016 to 2021.

Dutch corporates open to foreign providers but have a preference for well known brands. Corporates worry about expected hassle of a switch to a new provider. Target group is different from current customer base in NL.

XXX clearly has strengths to capture opportunities in the Dutch market. Yet, the SWOT analysis needs further localization to better fit the Dutch market.

SWOT NEEDS SLIGHT ADAPTATION TRANSITION TO iDC INEVITABLE MARKET OPEN TO NEW ENTRANT

EXECUTIVE SUMMARY AND CONCLUSIONS (2)

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The top 5 players in the market do not really differentiate themselves very clearly. They are mostly associated with being well known and trusted.

Opaque positioning leaves room for a new entrant to develop a differentiating positioning. However, this will need education efforts and investing in the brand.

MATURE COMPETITORS LACK OF DIFFERENTATION POSITIONING SCENARIO

Competition is fierce and dominated by domestic players. As corporates are price sensitive PPI’s are struggling to become profitable which is expected to spur consolidation.

EXECUTIVE SUMMARY AND CONCLUSIONS (3)

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The content approach of XXX is a clear strength. However, there’s a need for adding more Dutch subjects and themes.

There are target groups who are more open and ready to switch to a new entrant, e.g. insured corporates and scale-ups. SSGA could start with targeting them and their consultants.

There are quite some relevant themes, e.g. the end of the insured contract, regulatory changes, mandatory participation, fair pricing/low costs, transparency, TDF, Risk, low yield environment and “doorbeleggen”.

THEMES EXPERTS AND CORPORATES CONTENT OPPORTUNITIES SMART TARGETING NEEDED

• Addressability of Market: most of Europe has moved, is moving, or will move to a DC structure – we are well placed toaddress this Investment Strategies: the move to passive, dueto competitive or legislative pressure on fees plays to our indexing heritage.

• Solutions Mindset: outcome orientated solutions are becoming sought after. Our target retirement fund experience means we are positioned well for this move.

• Leverage Broader Capabilities: by working closely with XXX we can extend our reach and offer ‘bundled’ offerings.

• Fierce competition: Legal and General, Blackrock particularly are pursuing European DC market opportunities very aggressively.

• Legislation/Regulation: the European regulatory landscape is constantly shifting and, while this disruption presents opportunity, it also makes the future unpredictable.

• New distribution models: the changing nature of retirement means that new models for distribution will emerge: robo-advice, retail wealth platforms etc.

XXXX SWOT ANALYSIS DC CONTINENTAL EUROPE

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• Brand and market presence: XXX has a strong DC brand in the YYY, AUS and the ZZZ and a strong DB reputation locally. We believe we have a well built out team structure with a good distributive reach. XXX has been servicing the Netherlands from the Belgian office since the 1980s and opened its office in Amsterdam in 2007.

• Resources: We are well established in DC in UK + IRE. And have a solid team of 8 on the ground in Amsterdam.

• Product offering: with the market emphasis on low cost, diversification and volatility control over the lifecycle, our investment product set, covering index and multi asset is, ideally suited to DC NL.

• Unconflicted marketing positioning: unlike some of our peers we do not compete with our distribution partners and can offer them a relationship free from conflicts.

• Infrastructure and operations: our systems need to be updated to meet the rigour demanded by DC clients and platforms. We have struggled to deliver first class service to our clients and partners.

• Late to the party? Our key competitors have been in market for many years. As a relatively late coming ‘challenger brand’ there is considerable market inertia to overcome.

S W

O T

• Brand and market presence (NL): SSGA is not well known among corporates. SSGA competes with a strong top 5 in iDC and 1 challenger (Brand New Day)

• Resources (NL):SSGA expertise and network skewed towards passive/DB and asset servicing.

Validated Not applicable in Dutch market

• Solutions Mindset: The opportunity lies in SSGA’s broad target retirement fund experience. For positioning the Target Date Funds more education will be needed since corporates currently are more familiar with Lifestyle.

• Getting up to speedwill definitely be a challenge. The market place is crowded, price levels are low and PPI’s are struggling with profitability. Entering the market is a longer term investment..

• Entering a mature market with dominant domestic players will require smart partnerships to leap frog in terms of infrastructure and operations (e.g. iPS).

CommentsComments TESTED IN DUTCH CONTEXT

EXPECTED PACE - MARKET SHARE DC TO DOUBLE BY 2021

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• In 2016 5% of employees had a DC arrangement

• DC market share expected to at least double between 2016 and 2021 to 10%

• Pension funds expected to profit most of this trend

• Insurance companies expected to loose significant market share –from 71 to 53%

• Pension Funds expected to win market share – from 6 to 21%)

• Moderate market share growth expected for PPI (from 23% to 26%)

Ø Conclusion: if we combine the feedback from our research with the best report regarding expected growth by COCOCO it’s fair to say that the market expects slow but steady growth for DC. For P this means a growth factor of 2.26 (2016-2021)

• Hence, our advice is to combine the DC/DB efforts in the Netherlands. A trend that we see happening across the Dutch pension Industry as the future is hard to predict.

Source: AonHewitt, Sep 2016, n=100 Corporates / Multinationals

2016 2021

CLEARLY COST AND TRANSPARENCY ARE KEY IN THE DUTCHMARKET

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DECISION MAKING DRIVERS (1)

What is your opinion about the pension solutions your company offers?

What are the most important decision criteria for selecting a provider of DC solutions?

54%

43%

29%

28%

27%

24%

20%

5%

Costs

Transparency

Risk adjusted return

Advice

Service

Investment Strategies

Communication

Open architecture

Which investment solutions do you want in your pension solution?

38%

25%

21%

20%19%

1%

Multi asset fundsDynamische asset allocation

Volatility management

Don't know

Smart Beta

Other

Top results per category

“We entered into an insured solution at MMMMM 2,5 years ago and will need to find a new

solution in 2019, when the contract ends.

49%

26%

14%

5%

5%

2%

Good

Neutral

Very good

Bad

Don't know

Very bad

50%

30%

21%

No

Yes

Don’t know

PENSION INSTITUTIONS, CONSULTANTS, FINANCIAL INSTITUTIONS AND WEBSITES ARE KEY SOURCES FOR INFORMATION

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INFORMATION

Where are you looking for information when you are looking for a pension solution?

Which of these information sources do you think is most valuable?

49%

43%

36%

35%

8%

7%

7%

3%

Pension institutions

Websites

Consultants

Financial institutions

Print media

Universities

Other

Blogs

31%

26%

26%

19%

6%

4%

3%

0%

Pension institutions

Consultants

Websites

Financial institutions

Other

Universities

Print media

Blogs

Are you looking abroad for pension solutions?

Top results per category

Our consultant (Towers W joins our pension

committee meetings and presents the choices we

need to make.

POSITIONING CRITERIA & INSIGHTS

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HYGIENE CRITERIA

“Easy to use”“Easy to understand

“Good service”

REPUTATION OF TOP 5

“Trusted”“Well-known

“Good reputation”

KEY DECISION CRITERIA

“Transparency”*“Low-cost”FI

ND

ING

S PO

SITI

ON

ING

CR

ITER

IAIN

SIG

HTS

“Earn the right” by providing easy to use online portals and easy to understand products

and communication. Unburden the employers

through good service”

“Include proof re. heritage, reputation and trustworthiness” (some

providers use testimonials)

“Include low cost and transparency elements and high

end solutions (e.g. TDF vs lifestyle) in your positioning”

From field researchFrom content scan

Ease of transitionThere is an opportunity to make easy transition an element of the positioning in the initial phase of

the market entry.

Point of differenceFrame of reference

CONSULTANTS

TARGETING: START WITH LOW HANGING FRUIT

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CORPORATES

Opportunity materialises close to termination date of insured

contract

Target scale-ups (e.g.: Coolblue)

High switch “costs”

Subject to mandatory participation in industry

with pension funds

Some corporates

with an OPF switch to a PPI,

e.g. POSTNL

YES

NO

NA

CONTRACT

NO CONTRACT, GROSS SALARY SOLUTION

INSURED CONTRACT

High opportunity

Medium opportunity

High opportunity

Remarks

OTHER

Main assumption: vehicle for market entry is xxx

Corporates rely heavily on consultants for decision making. The Dutch market counts 1500 consultants: Top 10, next 150 and the

rest. The top 10 and next 150 service medium and larger corporates.

We noticed some segments in the Dutch market with a concrete need for new pension solutions within the foreseeable future. These

segments, labelled as ‘High opportunity“’ could be considered to target first when entering the

market.

Medium opportunity