If you have questions please contact your Aon consultant or email global.retirement.mailbox@aon.com Please also use this mailbox to let us know how we could improve the ways in which we update you on new retirement topics of importance to you. Prepared by Aon Hewitt Consulting | Retirement and Investment

September 2017

This Update summarises key recent developments related to the management of employer-sponsored retirement plans globally, including: •Regulatory changes that may require employers to take action to implement new or imminent requirements; •Planned changes and trends that may trigger a need to review local plans and plan actions; •Proposed changes that may need that may need consideration of potential impact, and monitor development.

Global Retirement Update

IMPLEMENT REVIEW MONITOR Australia: Implement Single Touch Payroll (STP) by 1 July 2018

Australia: Review that registered superannuation entities (RSE) consistently deliver high quality

Denmark: Monitor pension tax reform plan

Germany: Implement requirements for protection of pensions accrued from 1 January 2018

Malta: Review plan design in light of new tax incentives

Israel: Monitor progression of mandatory retirement age bill

Kenya: Implement tax changes for retirement and life benefits

South Africa: Review impact of deferral of compulsory annuitization on provident funds

Nepal: Monitor proposal to increase retirement age from 55 to 58

Nigeria: Implement changed tax treatment for early withdrawals

Switzerland: Review opportunity to establish 1e (pure DC) plan

Nigeria: Monitor the outcome of the Contributory Pension Scheme (CPS) reform bills

South Africa: Implement Retirement fund default regulations applying from September 2017

Ukraine: Review implications of approved pension reforms

Sweden: Monitor new pension solvency rules proposed

United Kingdom: Implement auto-enrollment where previously deferred for open DB scheme

United Kingdom: Review impact of revised Money Purchase Annual Allowance

United Kingdom: Monitor Court of Appeal case related to members’ expectations

United States: Implement pension mortality regulations

United States: Review model plan amendments for pension plans offering bifurcated payment options

United Kingdom: Monitor Supreme Court case related to part-time workers United Kingdom: Monitor Government’s response to its consultation on pension scams United States: Monitor Fiduciary Rule environment

This document should not be construed as advice or opinions. The comments are based on preliminary analysis of publicly available information and are provided on an “as is” basis, without warranty of any kind. Aon disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance on this content. Aon reserves all rights to the content of this document.

Aon Hewitt | Global Retirement Update | September 2017 2

Key Updates for Implementation

Australia: Implement Single Touch Payroll (STP) by 1 July 2018 The Revenue Minister unveiled a set of reforms to superannuation oversight that will speed responses to noncompliance:

The Single Touch Payroll (STP) system will merge payroll functions with tax and superannuation reporting. STP will be adopted by enterprises with 20 or more employees by July 1, 2018 and by smaller companies from July 1, 2019.

The Australian Tax Office (ATO) recovery powers will be enhanced, including the authority to request court-ordered penalties when necessary. *Superannuation funds will be required to report contributions received more frequently, at least monthly, to the ATO.

For more information, or support, please contact Ian Dudley.

Germany: Implement requirements for protection of pensions accrued from 1 January 2018 New rules protecting accrued pensions come into force for employment periods from 1 January 2018. These reflect German law to comply with the EU Mobility Directive in 2014. The laws apply to accrual of pensions whether being moved outside Germany, or remaining within Germany. The protections cover vesting periods, vested benefits, information provision, and buyouts of small vested benefits.

Depending on the design of the company retirement plan, the new regulations can have far-reaching implications for employers including increased financial, organizational and administrative costs.

Aon Germany has produced a bulletin on the EU Mobility Directive which is available in the link provided: EU Mobility Directive

For more information, help reviewing current provisions, or assistance implementing pension benefits, please contact Andre Geilenkothen.

Kenya: Implement tax changes for retirement and life benefits The Kenya Revenue Authority's revised PAYE Guide clarifies recent changes in the tax treatment of certain perks and benefits: *Retirement benefits, bonuses, and overtime allowances paid to workers earning below KES 11,180 (US $108.60) per month are tax-exempt. *Tax relief on life insurance premiums is lesser of 15% of premiums paid or KES 60,000 per year. *Meals provided in a company canteen are tax-free up to KES 4,000.

For more information, or support, please contact Anne Njeri.

Nigeria: Implement changed tax treatment for early withdrawals The Joint Tax Board (JTB) has issued a public notice on the closure of a tax loophole for retirement savings accounts (RSA). While employee deductions above the statutory minimum for these schemes are tax deductible, they are limited to one-third of monthly wages and, with limited exceptions; they should not be withdrawn within five years after contributions. Thanks to an ambiguous passage in Pension Reforms Act 2014, it has become common to both make excess contributions to the voluntary contribution scheme and withdraw the funds early. The JTB will now treat these withdrawals as "artificial transaction" subject to personal income tax.

For more information, or support, please contact San Singaravelloo.

Aon Hewitt | Global Retirement Update | September 2017 3

Key Updates for Implementation (2)

South Africa: Implement Retirement fund default regulations applying from September 2017 The Treasury has published the final Retirement Funds Default Regulations, effective September 1, 2017. Under these rules:

All defined contribution plans must include an "appropriate, reasonably priced" default investment portfolio for members who do not select a fund. A default preservation strategy must give departing members of pension and provident funds the option of leaving their savings in the fund with fees no higher

than those for active members. This would be a binding choice with the funds accessible only upon death or retirement. As the choice of a life annuity is irreversible, annuity purchase should be a "soft default." Funds should ask participants at the outset for their preference between

living and life annuity. Members must be provided retirement benefits counselling before their final selection. Any existing default arrangements must be brought into compliance by March 1, 2019.

For more information, or support, please contact Johan Botha.

United Kingdom: Implement auto-enrollment where previously deferred for open DB scheme Employers providing DB or hybrid schemes which are open to new members have been able to defer their automatic enrollment obligations for certain existing jobholders, until October 1, 2017. Such workers must then effectively be treated as new starters, and become subject to automatic enrollment from that date.

Employers who made use of this transitional provision should ensure arrangements are in place for its cessation.

For more information, or support, please contact Jillian Pegrum.

United States: Implement final pension mortality regulations Shortly before publication, the IRS issued Notice 2017-60, which provides updated mortality guidance for 2018 plan years for benefit calculation purposes under Internal Revenue Code (Code) section 417(e) and minimum funding purposes under Code section 430. The Notice refers to final mortality regulations under Code section 430, which were also recently published. More details about Notice 2017-60 and the final mortality regulations will be provided in the October Global Retirement Update.

At this point, employers should:

Update plan administration and communications to reflect the new mortality for 2018+ benefit calculations. Work with their actuary to determine the impact and timing of the new mortality in their funding valuations. Assess whether to perform plan-specific mortality studies to capitalize on a new opportunity, in advance of the deadlines in the first half of 2018.

For more information, or support, please contact Matthew Bond.

Aon Hewitt | Global Retirement Update | September 2017 4

Key Updates for Review

Australia: Review that registered superannuation entities (RSE) consistently deliver high quality The Australian Prudential Regulatory Authority (APRA) has served notice to RSE (registrable superannuation entities) licensees that they are required to continually “act in the best interests of beneficiaries” and “deliver quality outcomes on an ongoing basis.” Those that are not found to be "consistently delivering quality member outcomes" will be pressured to improve their results or shut down. APRA officials will meet with their boards to discuss problem areas and urge improvement "within a reasonably short period." APRA "expects" those RSE licensees unable to improve performance to merge with another fund or transfer their members to a better product.

For more information, or support, please contact Ian Dudley.

Malta: Review plan design in light of new tax incentives The Finance Ministry has introduced tax incentives for pension contributions that were first broached in the 2017 Budget. Employers may deduct up to EUR 2,000 per employee from taxable profits for contributions to the voluntary occupational pension. Employers contributing up to EUR 1,000 per year to an employee's pension will also qualify for a tax credit of up to EUR 150. That is a tax-exempt benefit for employees and they may also earn a tax credit of up to EUR 150 for contributions up to EUR 1,000 per year. The assets may be withdrawn as a lump sum with 30% tax relief between age 50 and 75. The tax relief applies for 2017.

For more information, or support, please contact Philippos Mannaris.

South Africa: Review impact of deferral of compulsory annuitization on provident funds The entry into force of the requirement to annuitize two-thirds of provident fund distributions was first introduced in 2015, but postponed repeatedly since then. Its March 1, 2018 entry into force is now pushed back to March 1, 2019. This was divulged by the Treasury's director of personal income taxes and savings in a briefing to Parliament's standing committee on finance. He maintained that the Treasury is committed to this move despite opposition from both management and labour.

For more information, or support, please contact Johan Botha.

Switzerland: Review opportunity to establish 1e (Pure DC) plans The 1e plan, a second-pillar pension with personal investment choices for people earning at least 4.5 times the maximum old age pension (AHV/AVS), was first introduced in 2006 but has seen little use. The Federal Council has now approved measures clarifying 1e schemes. If requisite legal conditions are met, they will qualify as pure defined contribution schemes in that members will no longer have a guarantee of accrued assets if their investments have lost money. Participants will have up to 10 investment options, at least one of which must be "low-risk." These changes will go into effect on October 1, 2017 and existing 1e plans will have until January 2019 to come into compliance.

Aon Switzerland has produced a bulletin on amendments to the 1e scheme legislation which is available here link.

For more information, or help reviewing this opportunity, please contact Katja Imboden.

Aon Hewitt | Global Retirement Update | September 2017 5

Key Updates for Review (2)

Ukraine: Review implications of approved pension reforms Already flagged in the July issue of the GRU (gaining support for the parliament and passing a first vote), the President of Ukraine has now signed in Law 6614. Some notable provisions included in the final version:

A person with 40 years of pensionable service will be entitled to a full pension from January 1, 2028, irrespective of age; From January 1, 2018, the minimum years of pensionable service for retirement at age 63 will start a climb from 15 years to 25 that will conclude in 2028; That same decade will see the minimum threshold for retirement at age 60 rise from 25 years to 35; From October 1, 2017, working pensioners will be entitled to their full pensions; The maximum pensionable salary will be 15x the minimum wage; The regulatory framework for the accumulative pension should be concluded by July 1, 2018; From 2021, an automatic annual benefit increase will blend equal parts wage inflation and the CPI; People may pay a lump-sum contribution to make up for a pensionable service shortfall of up to five years.

Employers should be aware of these changes, and review them to see if this will have an impact on their company.

For more information, or support, please contact Svitlana Pivtorak.

United Kingdom: Review impact of revised Money Purchase Annual Allowance A new Finance Bill has been published, which includes provisions, effective from April 6, 2017, for the reduction in the Money Purchase Annual Allowance (MPAA) to £4,000, and the pensions advice exemption. Both of these provisions were removed from the previous Finance Act in order to speed its progress through parliament before the snap General Election.

For more information, or support, please contact Jillian Pegrum.

Aon Hewitt | Global Retirement Update | September 2017 6

Key Updates for Review (3)

United States: Review model plan amendments for pension plans offering bifurcated payment options On August 20, 2017, the Internal Revenue Service (IRS) published Notice 2017-44, which provides model plan amendments that may be used to comply with final regulations issued September 16, 2016.

The 2016 final regulations clarified the calculation of benefits when a participant “bifurcates” the distribution of his or her pension benefit into two portions, one of which is a lump sum (or other form subject to minimum benefit value requirements under Section 417(e)) and one of which is not. The portion payable as a lump sum (for example) might be a percentage of the accrued benefit, the benefit accrued before or after a certain date, or the benefit attributable to employee contributions. The 2016 final regulations are effective for distributions with annuity starting dates in plan years beginning on or after January 1, 2017, but may be applied retroactively.

Employers should review their current plan provisions to ensure compliance with Notice 2017-44 and other IRS guidance.

IRS Notice 2017-44 is available here.

For more information, or support, please contact Matthew Bond.

Aon Hewitt | Global Retirement Update | September 2017 7

Key Updates for Monitoring

Denmark: Monitor pension tax reform plan The Finance Minister's Job Reform II package features pension tax relief first broached this spring. The annual cap on pension deductions would rise to DKK 50,000 for the five years preceding retirement. In addition, a compensatory tax on income from pension savings would be removed. Also, the tax deduction for pension contributions would rise by 3.9% for people at least 15 years from retirement and 7.7% for those within 15 years of retirement.

For more information, or support, please contact Martin Augustinus.

Israel: Monitor progression of mandatory retirement age bill The Knesset's coalition chairman has sponsored a bill that would protect workers from mandatory retirement at the legal retirement age of 67. A worker could not be involuntarily retired at age 67 unless proven unfit for the job by a voluntary physical exam. When a worker reaches age 67, the employer would be obliged to provide reasonable accommodation of any request to switch to another position or reduce working hours. The bill reflects a 2012 National Labor Court ruling meant to severely limit involuntary retirement, but the Finance Minister opposes it, maintaining that it would hurt the job market for younger workers.

For more information, or support, please contact Elana Schroeder.

Nepal: Monitor proposal to increase retirement age from 55 to 58 The General Federation of Nepalese Trade Unions (GEFONT) hailed the legislature's adoption of worker friendly Labour Bill 2074-BS. Among other changes, the retirement age will rise from 55 to 58. The law awaits the President's signature.

For more information, or support, please contact Ashley Palmer.

Nigeria: Monitor the outcome of the Contributory Pension Scheme (CPS) reform bills Several bills seeking to reform the Contributory Pension Scheme (CPS) are now before the National Assembly and public hearings are due soon. They are now facing resistance from many who see them undermining the CPS function. Among the flagged measures: *The bill on raising the lump-sum withdrawal from the Retirement Savings Account from 25% to 75% has already cleared the Senate, but detractors warn that the 25% left after the lump sum would not supply adequate retirement income, defeating the purpose of the CPS. *A bill exempting the personnel in several governmental bodies including the police force and customs service from participation in CPS (only two are exempted under the original law) would start unravelling CPS relief from the burden of privileged pensions.

*The employer CPS contribution would rise from 10% to 12%.

For more information, or support, please contact San Singaravelloo.

Aon Hewitt | Global Retirement Update | September 2017 8

Key Updates for Monitoring (2)

Sweden: Monitor new pension solvency rules proposed The Financial Supervisory Authority (Finansinspektionen) has proposed new regulations on capital requirements for occupational pensions. One component would be a standard minimum capital requirement and the authority would be empowered to take away the licenses of those pension companies that fall below a certain threshold. The other would use a variation on the traffic light model to gauge a pension's risk exposure. When found "risk-sensitive," a pension fund would be asked to remedy the imbalance, but would have adequate time for a smooth recovery, and a strong fund that can handle some risk would not necessarily be dissuaded from pursuing higher gains. Many of the plan's details are not finalized.

For more information, or support, please contact Carita Opseth.

United Kingdom: Monitor Court of Appeal case related to members’ expectations The Court of Appeal has overturned the decision that IBM had breached its duty of good faith by implementing changes to the scheme that were inconsistent with members' reasonable expectations. The Court ruled that the members' expectations were just one of the many relevant factors that IBM had to take into account. The critical test was whether, even after the relevant factors have been considered, the decision was one that no rational decision maker could have reached.

It remains important to take care that communications about pension changes do not create inappropriate expectations.

For more information, or support, please contact Jillian Pegrum.

United Kingdom: Monitor Supreme Court case related to part-time workers The Supreme Court has referred the case of O'Brien v Ministry of Justice to the CJEU, to rule on whether periods of employment before July 2000 must be taken into account when quantifying the pension entitlement of part-time workers (if those periods would have been taken into account for comparable full-time workers).

For more information, or support, please contact Jillian Pegrum.

United Kingdom: Monitor Government’s response to its consultation on pension scams The Government has issued a response to its consultation confirming the following measures aimed at preventing pension scams: restricting the circumstances in which members have a statutory right to transfer out; making it harder to open fraudulent schemes and a ban on cold calling in relation to pensions.

For more information, or support, please contact Jillian Pegrum.

Aon Hewitt | Global Retirement Update | September 2017 9

Key Updates for Monitoring (3)

United States: Monitor Fiduciary Rule environment On August 30, 2017, the Department of Labor’s (DOL) Employee Benefits Security Administration released a Notice of Proposed Amendments to certain prohibited transaction exemptions, delaying the applicability of those amendments. According to the DOL, the primary purpose of the extension is to give the agency the time necessary to consider possible changes and alternatives to these exemptions.

The present transition period is from June 9, 2017, to January 1, 2018. The new transition period would end on July 1, 2019. The proposed amendments to these exemptions would affect participants and beneficiaries of plans, IRA owners, and fiduciaries with respect to such plans and IRAs.

Employers should continue to monitor the regulatory environment for the fiduciary rule.

The Notice is available here. The news release is available here.

For more information, or support, please contact Matthew Bond.

Aon Hewitt | Global Retirement Update | September 2017 10

Country Action date Brief indication of the change Local Aon consultant

Australia A discussion paper published on how “the changing nature of work”, particularly the gig economy, prompts a need to review superannuation contribution rules. Ian Dudley

Australia Proposals made for superannuation governance improvements with a more detailed consultation to follow later this year. Ian Dudley

Canada A discussion paper issued on Nova Scotia’s defined benefit pension plan funding framework and other regulatory issues. Julianne Ralph

Canada Amendments published regarding consent for annuity purchases on wind-up & extended allocation of payments from the Pension Benefits Guarantee Fund. Julianne Ralph

Canada A regulation that amends the provisions applying to Québec member-funded pension plans (MFPPs) was recently published with a retroactive effective date of December 31, 2016. Julianne Ralph

Canada Amending regulations were recently filed to introduce the concept of a “limited liability plan” (LLP) in Saskatchewan. Julianne Ralph

Chile Pension reform legislation now before the Chamber of Deputies includes measures to better protect the investments of AFP pension fund participants. Judith Bekerman

Chile The pension regulator held a second round of public consultations on its freshly revised draft regulations for AFP private pension investment in alternative assets. Judith Bekerman

Croatia 1 September 2018

The rules of keeping records for employees has been simplified. Among other changes, it is no longer required to keep a record of pensionable service prior to current job. Bart Steegs

India Employees Provident Fund (EPF) portability is being improved. Members who change jobs will have a streamlined process for transferring their funds to a new account from this month. Chitra Jayasimha

India The chairman of the Pension Fund Regulatory and Development Authority (PFRDA) has previewed a formal government announcement that the age range of 18-60 for joining the National Pension System (NPS) will soon expand to 65.

Chitra Jayasimha

Other Notable Updates

Aon Hewitt | Global Retirement Update | September 2017 11

Country Action date Brief indication of the change Local Aon consultant

Indonesia Revised rules have been issued on mandatory government securities investment for non-bank financial institutions. Pension funds and life insurance companies must invest at least 30% of their assets (20% for general insurance companies) in government instruments.

Surendran Ramanathan

Romania In further evidence of the new government's ambivalence towards mandatory second-pillar pension schemes, the Finance Ministry has disclosed a plan to cut the employee contribution rate - now 5.1% and previously expected to climb to 6% in the 2018 Budget - to 2.5%.

Kostas Veras

Romania A government study of pillars I and II will present a strong case for making the second pillar's contributions optional and eliminating the 2.5% administrative fee that was temporarily introduced at the launch of the second-pillar. The changes are expected in 2018.

Kostas Veras

Russia 1 January 2018 Further to GRU June 2017 a proposal has been drafted that will further increase the minimum wage by 21% per January 1st 2018 and tied to the subsistence wage as per January 1st 2019. Anastasiya Averina

Switzerland A government-commissioned report by PPC metrics has been shelved as, currently, the costs outweigh the benefits. The report introduced a standardized traffic-light system for rating the sustainability of pension funds.

Katja Imboden

Thailand The Labour Protection Act has been updated to include changes to the different minimum wages and the definition of retirement. Xiulin Loo

United States On August 31, 2017, the IRS released Notice 2017-45, which extends the temporary nondiscrimination relief for closed defined benefit plans that is provided in Notice 2014-5. Matthew Bond

Other Notable Updates (2)

Aon Hewitt | Global Retirement Update | September 2017 12

Reminder of Previous Key Updates

IMPLEMENT REVIEW MONITOR

Japan: Introduction of risk sharing pension plans. Latest information here. Contact: Hajime Baba

Canada: Review changes to the Canada Pension Plan from 2019. GRU January 2017. Contact: Julianne Ralph

Canada: Monitor multi-jurisdictional pension plan funding and asset allocation rules. GRU August 2017. Contact: Julianne Ralph

Malawi: Implement mandatory employee contributions. GRU June 2017. Contact: Eleanor Chibwana

Canada: Review Nova Scotia temporary solvency funding relief regulations. GRU August 2017. Contact: Julianne Ralph

Chile: Monitor pension reform introduced. GRU August 2017. Contact: Judith Bekerman

Netherlands: Change to retirement age in pension plans from 1 January 2018 (GRU May 2017) and state pension age hike (GRU December 2016). Contact: Yasemin Ozdal-Dogan

Czech Republic: Pension age to be 65 from 1 October 2017, until 2030 when updated for life expectancy. GRU April 2017 Contact: Petr Kudlak

Hong Kong: Monitor launch of a public annuity scheme expected in mid-2018 GRU May 2017 and proposals related to the MPF. GRU June 2017. Contact: Keren Li

Nigeria: Implement changes to investment funds, following the amendment in regulation. GRU June 2017. Contact: Eleanor Chibwana

European Union: IORP2 Directive regarding risk management, governance and communications. GRU January 2017. Contact: Colin Haines

Indonesia: Monitor proposals relating to additional benefits to be offered by pension schemes. GRU May 2017 Contact: Ozairi Othman

Poland : Alternative to new State-run DC plan, delayed until 2019. Contact: Remigiusz Kostka

France: Most implementing regulations now published for new occupational pension vehicle available early 2018. GRU April 2017. Contact: Marc Salameh

Ireland: Monitor proposals in Social Welfare and Pension Bill GRU June 2017and Personal Savings Accounts GRU May 2017. Contact: Shane Horgan

Thailand: Mandatory Provident Fund (MPF) starts January 2018. (More information here.) GRU July 2017. Contact: Xiulin Loo

Germany: Review opportunities from law to enable pure DC plans from January 2018. Updated information can be found here. Contact: Stephen Finley

Nigeria: Monitor proposals to raise the minimum employer contribution to CPS from 10% to 12%. GRU April 2017. Contact: San Singaravelloo

Turkey: Auto-enrollment key dates. GRU January 2017 Contact: Neslihan Ayanoglu

Macau: Review the suitability of a new non-mandatory Central Provident Fund due to be in effect next year. GRU June 2017. Contact: Jayla Chen

United Kingdom: Monitor increase in State Pension Age to 68. GRU August 2017. Contact: Jillian Pegrum

Zambia: Implement pension benefits for employees. GRU August 2017. Contact: Chansa Musonda

United Kingdom: Review new requirements for benefits with guarantees. GRU August 2017. Contact: Jillian Pegrum

United Kingdom: Monitor impact of new money laundering regulations. GRU August 2017. Contact: Jillian Pegrum

Zimbabwe: New legislation establishes the governance rules for pension fund trustees. GRU August 2017. Contact: San Singaravelloo

United States: Review second set of FAQs on transition period fiduciary rule relief and guidance. GRU August 2017. Contact: Matthew Bond

The items in this section have implementation dates in the next 6 or so months, and need some action or consideration soon. These items were highlighted in earlier updates as being typically of interest to readers with global or regional responsibilities.

Aon Hewitt | Global Retirement Update | September 2017 13

Previous Key Updates for Implementation Japan: Introduction of Risk sharing Pension Plan In 2017, a new type of pension plan referred to as risk sharing corporate pension plan became available in Japan. The purpose of this new arrangement is to help companies reduce (or eliminate) pension related risks from their books and increase plan solvency in case of an adverse economic situation. Risk sharing plans are governed by the Japanese defined benefit law and carry the characteristics of both traditional defined benefit and defined contribution plans. Similar arrangements exist already around the globe, such as the collective defined contribution plans in the Netherlands and the target benefit plans in Canada. The target ambition plans are also widely discussed in the United Kingdom. First risk sharing pension plans are expected to be set up around October this year.

For more information click here.

For more information, or support, please contact Hajime Baba.

Malawi: Implement new mandatory employee pension contributions Employees (new hires and actives under the age of 35) are now required to contribute a mandatory amount of 5% of their base salary to the occupational pension scheme, while employers’ mandatory contributions remain at 10% of base salary. The Government expects all schemes to comply with this change by July 2017.

For more information, or support, please contact Eleanor Chibwana.

Netherlands: Implement change to retirement age in pension plans The government recently issued a decree raising the normal retirement age for work pensions in light of new longevity figures. From January 1, 2018, it will increase from 67 to 68. The Tax Authority has published provisional contribution scales for defined contribution schemes reflecting that increase. As a result of the increase of the retirement age from 67 to 68, the pension plans must be updated.

Employers should ensure that the changes are implemented appropriately, and consider any broader impact for employees.

For more information, or support, please contact Yasemin Ozdal-Dogan.

Nigeria: Implement new asset funds The National Pension Commission has amended regulation on investment of pension fund assets to require that pension fund administrators (PFAS) offer multi-fund structure for retirement savings account. The four funds range by level of risk exposure and target age group. Fund I with up to 75% high risk/high yield assets is limited to those age 49 and below who make a formal request while Fund IV is exclusively for retirees and has 90% conservative investments. There is a six-month transition period has now started and all PFAS are expected to come into compliance by December 2017.

For more information, or support, please contact Eleanor Chibwana.

Aon Hewitt | Global Retirement Update | September 2017 14

Previous Key Updates for Implementation (2) Poland: Alternative to new State-run DC plan Significant changes coming towards second-pillar pension.

Already mentioned in our previous updates, there is a window of opportunity for employers to avoid having to pay into the new government-run defined contribution scheme (PPK) by establishing a PPE (employee pension plan). The introduction of these schemes have now been delayed until 2019. Nevertheless, it is important you are aware of the upcoming changes and act accordingly.

Based on our current understanding of the law we except the following:

PPE’s will also be available for registration next year and in subsequent years as a voluntary additional arrangement. This would mean that PPK’s and PPE’s can function simultaneously, plus additional 4th pillar solutions. Currently existing PPIs will not exempt from the obligation to establish PPKs;

It is our assumption that PPE’s functioning with a primary contribution of less than 2% will exempt from the obligation to offer PPKs at an early stage, but to keep this exemption, within 1 year of creation the employer's contribution probably has to be raised to 3.5%, Possibly 4%. The minimum contribution to be paid into a pension plan from January 1st 2019 is expected to be 1.50%;

The option in which assets will be managed from the beginning by private financial institutions (investment fund companies) and not solely the "state manager" seems more likely to happen;

The conditions for disbursement of funds collected in the PPK are to be relaxed: the original idea provided for a payment of up to 25% of the funds on a one-off basis. Currently, it is said that the remaining 75% of the funds would be available for one-time payment, but a 19% tax on capital gains ("Belka" tax) would be levied on such payments. If the aforementioned 75% would be paid out in installments (for a minimum of 10 years) then such a tax would not be charged.

For more information, or support, please contact Michal Baczkowski.

Turkey: Implement auto-enrollment according to launch deadlines based on number of employees Deadlines have already passed for companies with 100 employees or more. The next deadline (for enterprises) is 1 January 2018 for companies with 50 to 99 employees and companies that had less then 1.000 employees before 1 January 2017 and more then 1.000 employees at 1 April 2017.The deadline for companies with less then 50 people is 1 July 2018.

If they have not already done so, employers should determine the actions that they will take to satisfy the auto-enrollment requirements.

Please click here for a more detailed presentation on auto-enrollment (Page-by-page in Turkish and English.)

For more information, or support, please contact Neslihan Ayanoglu.

Aon Hewitt | Global Retirement Update | September 2017 15

Previous Key Updates for Implementation (3) Zambia: Implement pension benefits for employees Last year a new constitution has been installed, in which employees have been granted to right to receive a pension benefit from the employer. This benefit shall be reviewed periodically, is exempt from taxes and shall be paid out promptly and swiftly. The constitution defines this Pension benefit as a pension, compensation, gratuity or similar allowance in respect to a person’s service.

Employers should be aware of these requirements, review what provision they have in place and ensure they are compliant with the new constitution.

For more information, help reviewing current provisions, or assistance implementing pension benefits, please contact Chansa Musonda.

Zimbabwe: New legislation establishes the governance rules for pension fund trustees New legislation has been adopted establishing governance rules for pension fund trustees. It covers rules on qualification/disqualifications, appointment, terms in office, duties, and powers of trustees. The legislation is effective immediately, and trustees should file a declaration form. More information can be found here.

For more information, or support, please contact San Singaravelloo.

Aon Hewitt | Global Retirement Update | September 2017 16

From time to time Aon carries out global, regional and local surveys to share insight amongst peers, and events to share information with clients.

Surveys open for participation UK DC Scheme Survey - This survey looking at all aspects of DC plans in the UK remains open for participation. When the results have been analysed we will be producing a free benchmarking reports for those who complete it allowing them to compare themselves against their peers.

Continental Europe Investment Survey – This survey has been designed to identify trends and insights in investment management and fiduciary management.

IORP II survey – this new survey highlights the requirements for governance, risk management and communications that will apply to pension plans across the European Union by January 2019, and enables companies to self-assess their current compliance in order to prioritise areas for advice and action.

Recently published insights UK 2017 Fiduciary Management Survey – this survey examines the latest trends and practices in delegated investment and shares our views on the

market. 2017 Global Pension Risk Survey – Reports on the survey findings are now available for all the local markets (USA, Canada, UK, Germany, Netherlands, Switzerland, Ireland and Japan). A report on the findings regarding trends in global involvement in local decisions will be published by the end of October. A high-level overview of some of the main trends highlighted across the whole survey is provided on the next page.

Upcoming events Flexible retirement from UK DB schemes – short event in Birmingham (UK) discussing tools and sharing insights, also in Manchester

Developing trends Aon Hewitt Retirement and Investment Blog – Updated twice a week with the latest information and insights, with particular focus on investment market changes. Other recent topics include US tax reform.

What other companies are doing

Also visit the Global Retirement Management section of aon.com for access to broader information about global retirement topics. Please email global.retirement.mailbox@aon.com with any questions or to let us know how we could improve this update document.

Aon Hewitt | Global Retirement Update | September 2017 17

Aon Hewitt Global Pension Risk Survey overview Global Trends Key variations

Des

ign Fi

x Fu

ture

Closure of DB or new entrants

To a slightly lesser extent freezing DB for current employees

Japan – DC popularity restricted by low contribution limit.

Switzerland & Germany – pure DC limited suitability.

Alte

r Ac

crue

d Removal of non-guaranteed benefits

Exchanges agreed with members, e.g. remove escalations

Netherlands – can remove “guaranteed” benefits if funding weak.

UK & Ireland - widest range of exchange options

Fina

ncin

g Lo

se

Liab

ilitie

s

Targeting ultimate settlement with an insurer

Cash/transfers to members

Japan – insuring not permitted, and cash rare but fixed term annuity

Netherlands – lower desire to settle

Acce

lera

te

Asse

ts

Diversifying asset classes to alternatives & higher-yield bonds

Hedging interest rate risks

Germany – trend to equities, but from no funding

Ireland – trend to government bonds due to funding measures

Switzerland – little hedging; reduced local bonds

Ope

ratio

ns

Effe

ctiv

e Ex

ecut

ion

Delegation of execution of investment strategy & monitoring

EU cross-border plans with more flexible regulations

Germany – less delegation to date, stronger future desire

Netherlands & Ireland – greatest delegation & cross-border activity

Ove

rsee

O

ppor

tuni

ty

Regular monitoring of funding progress

To a lesser extent monitoring implications & opportunities

Germany & Japan – less frequent monitoring of funding & assets

UK – greatest monitoring of progress towards longer-term strategy

Netherlands – greatest detail in monitoring

Global involvement reported in nearly 90% of local market plan decisions, with a noticeable broadening from Design to Financing to Operations. Two-thirds of multinational companies have a long-term DB financing strategy, with the end-state and path to reach it primarily detailed for tier 1 markets. Most have global investment principles, but less so for the increasingly prevalent alternative classes, of for hedging of inflation, currency, credit and longevity.