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The World Bank GroupThe World Bank Group
Net Plan Changes Effective May 1, 2007
Pension Administration
Tel: (202) 458-2977Email: [email protected]
2The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Staff Retirement Plan
Objectives for change Changes effective May 1, 2007 Plan design Voluntary Savings Component details How to enroll in Voluntary Savings Component Expanded pension option Cash Balance & Voluntary Savings investment
options Sources of Additional Information
3The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Objectives for Change
Make the Plan more flexible Increase investment flexibility Expand opportunities to build retirement savings Improve eligibility for pension Create more of an employer/employee balance for
retirement income
4The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Net Plan Changes – May 1, 2007
Increase Cash Balance Component investment options from 4 to 8
Add a new Voluntary Savings Component with 8 investment options
Provide an pension to employees who have five years of service and whose age plus years of defined benefit services equals at least 60
Allow monthly investment changes
IncreasedIncreasedExpandedExpanded
O P P O R T U N I T I E S
5The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Net Plan Components
• Defined Benefit Component
• Cash Balance Component
• Cash Balance Component
• Voluntary Savings Component
A Balanced Partnership for Building Retirement Income
World Bank Employees
6The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Voluntary Savings Component
Participants may contribute 1%-15% of net pay Eight investment options Option to change contribution percentage and
investment options monthly Contributions are after-tax Investments grow tax-deferred until distribution Account tracked in US dollars
ExpandedExpanded
O P P O R T U N I T I E S
7The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Voluntary Savings Component
Account paid as lump sum upon retirement or termination of employment
Account paid to beneficiary upon death while an active employee
No tax supplement on Voluntary Savings Component U.S. tax qualified plan which provides for rollovers upon
termination Distribution paid in US dollars or currency of choice based on
spot exchange rate
8The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Voluntary Savings Component - Enrollment
9The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Voluntary Savings ComponentEnrollment
10The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Voluntary Savings ComponentStatement
11The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Voluntary Savings ComponentStatement
12The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Defined Benefit Component– Pension Payment
Employees have asked for greater flexibility to receive an pension
New pension qualifications 10 years of benefit service or, 5 years of benefit service and age plus years of benefit service
equals 60
Example: change allows an employee hired at age 57 to receive pension payment if they work until age 62
IncreasedIncreased
13The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Cash Balance Component– Investment Changes
Monthly investment changes Changes received by last day of the month effective first day of
following month. (Example: changes made by midnight April 30, 2007 will be reflected on May 1, 2007)
More investment options
ExpandedExpanded
O P P O R T U N I T I E S
Current Options1234
New Options1 52 63 74 8
14The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Cash Balance & VS – Investment Options
Lower Risk Moderate Risk Higher Risk
Real 3%1,3
Lehman Brothers Government/ Credit Index1
Merrill Lynch USD LIBOR
Lehman Brothers2 U.S. TIPS Index
S&P 500 Index1
JP Morgan Emerging Market Bond Index Plus (EMBI+)
MSCI EAFE Index1
Russell 2000 Index
MSCI Emerging Market Index
1) Currently offered as investment options
2) Available in Voluntary Savings Component Only
3) Real 3% available in Cash Balance Component Only
15The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Real 3%
Investment Objective – guaranteed return of 3% above inflation rate based on US Consumer Price Index
Calendar Year Returns
0%
1%
2%
3%
4%
5%
6%
7%
2002 2003 2004 2005 2006
Administration Fees: None
Risk Level
Low Moderate High
Real 3% Option available in Cash Balance Component only
16The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Lehman Brothers U.S. TIPS Index
Investment Objective – Unmanaged market index comprised of all U.S. investment grade Treasury Inflation Protected Securities with at least one year to final maturity and at least $250 million per amount outstanding.
Calendar Year Returns
0%2%4%6%8%
10%12%14%16%18%
2002 2003 2004 2005 2006
Administration Fees: Annual fees of $10 per $10,000 in account value.
Risk Level
Low Moderate High
U.S. TIPS Option available in Voluntary Savings Component only
17The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Lehman Brothers Government/ Credit Bond Index
Investment Objective – Provide a return based on U.S. Treasury obligations with maturities over one year, government-related issues, and investment grade U.S. Corporate issues.
Calendar Year Returns
0%
2%
4%
6%
8%
10%
12%
2002 2003 2004 2005 2006
Administration Fees: Annual fees of $10 per $10,000 in account value.
Risk Level
Low Moderate High
18The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Merrill Lynch USD LIBOR
Investment Objective – Track purchase of an instrument having 3 months to maturity with a coupon equal to the closing quote for 3-month LIBOR.
Calendar Year Returns
0%
1%
2%
3%
4%
5%
6%
2002 2003 2004 2005 2006
Administration Fees: Annual fees of $5 per $10,000 in account value.
Risk Level
Low Moderate High
19The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
S&P 500 Index
Investment Objective – Track the return of the S&P 500 Index, which contains a representative sample of common stocks that trade on the NY and American Stock Exchanges and some over-the-counter stocks.
Calendar Year Returns
-30%
-20%
-10%
0%
10%
20%
30%
40%
2002 2003 2004 2005 2006
Administration Fees: Annual fees of $4 per $10,000 in account value
Risk Level
Low Moderate High
20The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
JP Morgan Emerging Market Bond Index Plus (EMBI+)
Investment Objective – Track return of traditional, market-capitalization weighted index comprised of U.S. dollar-denominated Brady Bonds, Eurobonds and traded loans issued by sovereign entities. Includes currency fluctuation risk.
Calendar Year Returns
0%
5%
10%
15%
20%
25%
30%
35%
2002 2003 2004 2005 2006
Administration Fees: Annual fees of $15 per $10,000 in account value.
Risk Level
Low Moderate High
21The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Russell 2000 Index
Investment Objective – Measures performance of the 2,000 smallest companies in the Russell 3000 Index, which is made up of 2,000 of the biggest U.S. Stocks.
Calendar Year Returns
-40%-30%-20%-10%
0%10%20%30%40%50%60%
2002 2003 2004 2005 2006
Administration Fees: Annual fees of $10 per $10,000 in account value.
Risk Level
Low Moderate High
22The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
MSCI EAFE Index
Investment Objective – Track return of the Morgan Stanley Capital International Europe, Australasia, Far East Index, a free float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. Includes currency fluctuation risk.
Calendar Year Returns
-20%
-10%
0%
10%
20%
30%
40%
50%
2002 2003 2004 2005 2006
Administration Fees: Annual fees of $10 per $10,000 in account value.
Risk Level
Low Moderate High
23The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
MSCI Emerging Market Index
Investment Objective – Measure equity market performance in the Global emerging markets through a free float-adjusted market capitalization index. Includes currency fluctuation risk.
Calendar Year Returns
-10%
0%
10%
20%
30%
40%
50%
60%
2002 2003 2004 2005 2006
Administration Fees: Annual fees of $20 per $10,000 in account value.
Risk Level
Low Moderate High
24The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Investment Funds – Average Annualized Returns
Investment Option 1 Year 3 Years 5 Years
Real 3% 6.38% 5.77% 5.57%
Lehman Brothers U.S. TIPS Index 2.74% 3.44% 7.22%
Lehman Brothers Government/ Credit Index 5.39% 3.27% 5.18%
Merrill Lynch USD LIBOR 5.32% 3.41% 2.67%
S&P 500 Index 11.97% 9.10% 6.82%
EMBI+ 7.88% 11.61% 14.12%
Russell 2000 Index 9.87% 11.95% 12.44%
MSCI EAFE Index 21.57% 19.53% 16.88%
MSCI Emerging Market Index 17.39% 26.84% 25.31%
Historic performance is not necessarily indicative of actual futureinvestment performance, which could differ substantially
25The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Additional Resources
Pension and Retirement Information website Investment Fact Sheets Voluntary Savings Component description Voluntary Savings Component Account Statements Basic Investment Guidelines FAQ’s
Information to come Staff Retirement Plan Highlights Brochure Enhancements to Retirement Planner
26The World Bank GroupThe World Bank Group
World Bank Pension Administration April 2007
Additional Questions
X82977 Pension Information Line: (202) 458-2977 Email: “Pension Administration”
An Employer/Employee Partnership