SHIFTING DEMOGRAPHICS

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Phoebe Bradford
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1 SHIFTING DEMOGRAPHICS Raf Choudhury Senior Investment Strategist, Investment Solutions Group, State Street Global Advisors

2 The Demographic Time Bomb Elder population is growing and living longer Lower expected returns Increased responsibility to save for retirement

3 Old Age Dependency Ratio A measure of the pressure on productive population Population aged 65+ per 100 aged World More Developed Regions Less Developed Regions Least Developed Countries Source: UN.

The World s older population is growing dramatically Percentage of workforce 65+ Elder Population is Growing 17% Percentage of Population Aged 65 and Over: 2015 and 2050 Aged 65+ 2015 (%) 2050 (%)

4 The World s older population is growing dramatically Percentage of workforce 65+ Elder Population is Growing 17% Percentage of Population Aged 65 and Over: 2015 and 2050 Aged (%) 2050 (%) Australia % Japan or > U.S UK Source: An Aging World: 2015, International Population Reports by Wan He, Daniel Goodkind, and Paul Kowal. Issued March 2016

Increased Responsibility To Save For Retirement Members left to bridge retirement gap and are unequipped to do so Percentage of members in DB and DC Plans Global Financial Literacy Report Card Rank

5 Increased Responsibility To Save For Retirement Members left to bridge retirement gap and are unequipped to do so Percentage of members in DB and DC Plans Global Financial Literacy Report Card Rank Country Weighted Average % Score Grade 1 Singapore C 2 Australia D 3 UK D 4 Canada D 5 Hong Kong D 6 China D 7 Switzerland D 8 Italy D 9 Brazil D 10 US D Source: Center for Applied Research Preliminary Research Findings, May 2014.

6 Members will have to work harder to bridge the returns gap Diminishing Expected Returns 1 Lower Expected Returns 7.9% 4.0% 6.5% 7.9% 4.5% 6.0% 5.0% 5.9% 0% 2.0% 0% 2.0% 1 McKinsey Global Institute (May 2016) Diminishing Returns: Why Investors may need to lower their expectations. Historical returns for Western European fixed-income are based on treasury bonds using data from the Dimson-Marsh-Staunton Global Returns database, which targets a bond duration of 20 years. Future returns show ranges across a set of countries, and are based on ten-year bonds; numbers reflect the range between the low-end of the slow-growth scenario and the high end of the growth-recovery scenario. Past performance is not a guarantee of future results. estimated returns reflect subjective judgments and assumptions. There can be no assurance that developments will transpire as forecasted and that the estimates are accurate.

7 What Can We Do To Prepare For These Challenges? Elder population is growing Shifting focus towards solutions for older members Lower expected returns Increase savings Work longer and living longer Require guaranteed income Increased responsibility to save for retirement Expand educations and wellness programs Tailor communications to different demographics Robo Advice

8 Important Disclosures Issued by State Street Global Advisors, Australia, Limited (AFSL Number , ABN ) ( SSGA Australia ). Registered office: Level 17, 420 George Street, Sydney, NSW 2000, Australia Telephone: Web: The views expressed in this material are the views of the SSGA DC Team through the period ended 31 December 2017 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Investing involves risk including the risk of loss of principal. This material is general information only and does not take into account your individual objectives, financial situation or needs and you should consider whether it is appropriate for you. Investing involves risk including the risk of loss of principal. There is no representation or warranty as to the currency or accuracy of this material, and SSGA Australia shall have no liability for decisions based on such information. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA's express written consent State Street Corporation All Rights Reserved. Exp Date: 31/05/2018 Tracking Code: ANZ.INST

9 SHIFTING DEMOGRAPHICS Raf Choudhury Senior Investment Strategist, Investment Solutions Group, State Street Global Advisors

9/02/2018. Building a members pension account under a TBC regime

9/02/2018. Building a members pension account under a TBC regime Building a members pension account under a TBC regime Jonathan Snead, Head of Portfolio Strategists, Asia Pacific, SSGA Nigel Stewart, Executive Director, Dimensional David Wanis, Portfolio Manager and