Annual Report 2019 Saving like this, is future 00 Index 01-Directors Report 2019 p. 1 - 4 02-2019 in figures p. 5 - 10 03-New Strategic Plan 2019-2021 p. 11 - 16 04-Our managament p. 17 - 24 05-Commitment to socially responsible investment (SRI) p. 25 - 32 Annexed 06-Market Performance Auditoría p. 33 - 44 DictamenAnnual Accounts actuarial Directors Report 2019 01 Directors’ Report 2019 1 Geroa Pentsioak, Entidad de Previsión Social Voluntaria de Empleo GEROA PENTSIOAK, EPSV DE EMPLEO, with tax identification number V20548244, commenced its activity in 1996 and is registered on the Basque Country Register of Voluntary Social Welfare Entities under number 178-G. Its sponsor members are: At 31/12/2019, the governing board comprised the following members: • ADEGI, with registered office at Paseo Mikeletegi 52, 20009 Donostia, Gipuzkoa. • Chair: Joseba Villarreal, representing ELA And the trade unions: • Vice-chair: Nerea Zamacola, • ELA, with registered office at Calle Consulado, representing ADEGI 8; 20011 Donostia, Gipuzkoa. • Treasurer: Francisco Javier Sasigain, • LAB, with registered office at Calle representing ADEGI Pokopandegi, 9; 20018 Donostia, Gipuzkoa. • Secretary: Ángel Ramos, • CC.OO, with registered office at Calle Carlos I, representing UGT 1; 20011 Donostia, Gipuzkoa. • UGT, with registered office at Calle Catalina de Erauso, 7; 20010 Donostia, Gipuzkoa. 2 Directors Report 2019 GEROA PENTSIOAK is an employment Mission voluntary social welfare entity (EPSV as per its Spanish acronym) created equally between ADEGI and trade unions, with the aim of supplementing the monthly state pension of its member workers. To do so, the equal contributions made over the working life of employees are managed by a technical team, which is responsible for managing them independently, efficiently and on a sustainable, long-term basis, in order to offset the decline in pensioners’ purchasing power. To be an Entity of which our members Vision feel a part and who value the competitive advantage it offers them, such as being able to maintain their quality of life in retirement, and protecting them in unforeseen circumstances such as disability and death. 3 Geroa Pentsioak, Entidad de Previsión Social Voluntaria de Empleo Our INDEPENDENCE: We are an Entity that does values not rely on any public body or financial entity. PARITY: We are an Entity founded on parity: on the one hand, 50% of our governing bodies are represented by ADEGI, and 50% by the ELA, LAB, CC.OO. and UGT, trade unions. On the other, contributions are made equally by workers and companies. NOT-FOR-PROFIT: The net profits obtained from managing resources are reinvested in members’ assets and used to cover the commitments with members in the form of annuities. Note that the members of the governing bodies do not receive any remuneration or allowances in their capacity as such, and all emoluments received by Entity personnel for sitting on boards or participating in other types of acts on behalf of GEROA revert back to the EPSV. SOCIAL RESPONSIBILITY: One of our objectives is to foment the Basque Industrial fabric, mainly through supporting the creation and development of projects in Gipuzkoa. 4 2019 in figures 02 2019 in figures 5 Geroa Pentsioak, Entidad de Previsión Social Voluntaria de Empleo Contributions CONTRIBUTIONS 96.74 M€ COMPANIES SECTORS 8,794 20 NEW MEMBER COMPANIES MODIFICATIONS TO % CONTRIBUTIONS · Lansolar Ingenieros · Paper + 0.2% (1.40%) 2 · Adecco Outsourcing · Clece +2% (3%) INCOMING MOVEMENTS INDIVIDUAL MEMBER COMPANIES* THAT HAVE LEFT Several calls have also been received from companies showing an interest in · Grupo Herribus joining, although they ultimately 1 1 *Those that lack a Gipuzkoa collective sector agreement did not. AMOUNT OF INCOMING MOVEMENTS 16,005 € 6 2019 in figures Benefits BENEFITS 55.09 M€ AS A LUMPSUM IN ANNUITIES 37.27 M€ 17.81 M€ NUMBER RETIREMENT SEVERE DISABILITY 2,004 9 TOTAL PERMANENT DEATH DISABILITY 2,753 376 159 ABSOLUTE PERMANENT DISABILITY 205 BENEFITS WITH ADDITIONAL CAPITAL (disability and death of active members) · TOTAL AMOUNT: 13,300,127€ 424 · ADDITIONAL CAPITAL: 4,764,712€ OUTGOING MOVEMENTS AMOUNT OF OUTGOING MINIMUM ANNUITY 2019 AVERAGE RETIREMENT MOVEMENTS ANNUITY 2019 76 538,475€ 175€ 185.60€ 7 Geroa Pentsioak, Entidad de Previsión Social Voluntaria de Empleo Investments Breakdown Fund 1 Breakdown Fund 2 SHORT TERM FIXED INCOME FIXED INCOME 13.03% 51.94% 97.98% EQUITIES OTHER SHORT TERM 27.55% 7.48% 2.02% Assets FUND 1 ASSETS FUND 2 ASSETS 2,189 M€ 48 M€ SOLVENCY MARGIN NET ASSETS OF THE ENTITY TOTAL ASSETS MANAGED 44% 37 M€ 2,274 M€ 8 2019 in figures Yield Fund 1 Yield 1 year 5 years 20 years Since 1996 GEROA 9.79% 5.01% 5.83% 6.26% CPI 0.80% 0.94% 2.07% 2.11% AVERAGE Mixed fixed income (INVERCO data) 5.31% 0.91% 1.70% 3.38% *This yield does not guarantee or determine future yields Expected Annuity 381 €/€/month for life* 63% Gains 37% Contributions Given this data, a 43 year old worker who began contributing in 1996 with the average contribution for the metal sector, and who continues making their contributions today, upon reaching the age of 67, would receive a life annuity of €381*, of which 63% will correspond to gains and a mere 37% to contributions. *Forecast based on a yield of CPI+2%. Amount corresponding to the present value of money. Annuity Revaluation GEROA TEMPORARY ANNUITIES GEROA LIFETIME ANNUITIES CPI STATE PENSION 1.50% 3.52% 0.80% 0.90% 9 Geroa Pentsioak, Entidad de Previsión Social Voluntaria de Empleo Expenses ADMINISTRATIVE DEPOSITARY BROKERAGE THIRD PARTY TURNOVER AVERAGE EXPENSES EXPENSES FEES FEES RATIO PAYMENT PERIOD 0.11% 0.03% 0.01% 0.26% 122.92% 1 Collective MEMBERS WITH CONTRIBUTIONS IN 2019 114,627 +1.22% This represents of total 37% FEMALE MALE workers in the province of Gipuzkoa 34% 66% AVERAGE AGE MEMBERS WITH NO MEMBERS WHO ARE RECEIVING BENEFICIARIES* WHO ARE CONTRIBUTIONS IN 2019 ANNUITIES RECEIVING ANNUITIES 43 years 162,040 2,531 607 *People receiving annuities as a result of the death of a member. · Bidasoaldea: 10,137 · Donostialdea: 10,871 · Urola Erdia: 5,871 · Debabarrena: 8,275 · Goierri: 8,584 · Urola Garaia: 4,793 · Debagoiena: 9,217 · Oarsoaldea: 9,832 · Urola Kosta: 6,498 · Donostia: 21,222 · Tolosaldea: 7,542 · Others: 11,785 10 New Strategic Plan 2019-2021 03 New Strategic Plan 2019-2021 11 Geroa Pentsioak, Entidad de Previsión Social Voluntaria de Empleo In 2019, we presented the 2019-2021 Strategic Plan agreed unanimously by all the organisations, which once again shows their firm commitment to the need to supplement the state pensions of workers in our territory. For the governing bodies of GEROA, this means being able to pay an annuity of at least the maximum contribution amount of the prior year over a prolonged period, i.e., between at least 20 years and for life. This Strategic Plan sets out 5 STRATEGIC LINES to be developed through different actions over the next 3 years. 1. Awareness and dissemination plan This strategic line forms part of the challenge to improve member satisfaction. In order to achieve this, we have switched collaboration agency, and our current ally is the San Sebastian- based company breakingmolds. The first step was to publish avideo that identifies the spirit of GEROA, which was awarded the Euskalit short film prize. Izaskun Legazkue and Eduardo García, collecting the Euskalit award. Furthermore, the new Welcome Pack has been sent out to the more than 1,300 new members of the Entity. All of the above is aimed at giving our members a better understanding of what GEROA is, its objective, its values and principal traits. 12 New Strategic Plan 2019-2021 2. Analysis of unemployment benefit To develop the second line of our strategic plan we hired, the Junior company of the Faculty of Deusto, to conduct a study of the different state social benefits, the results of which will be available in 2020. The incorporation of this contingency into those covered by GEROA is being done in such a way that it does not jeopardise the beneficiaries of said aid. ESME is the Junior Company of the Deusto University. 3. Analyse Geroa´s social responsibility “GEROA has been taken GEROA is an entity that avails of the financial markets several times as a model in order to achieve its objective of providing monthly supplements to workers’ pensions, an eminently SOCIAL to follow both at the level objective. of the Basque Country Proof of our social responsibility is manifold, such as the and at the state level.” equal and altruistic involvement of social agents in our governing bodies, a largely female workforce, a policy of choosing local suppliers or various lines aimed at promoting local investment. We were also the first employment EPSV to sign up to the Principles for Responsible Investment (PRI) in relation to Socially Responsible Investment (SRI). As a consequence of all of the above, GEROA has been chosen several times as a shining example both at Basque level, as a reference for the General Deputy of Bizkaia, at state level, through the Toledo Pact, -where Virginia Oregui, a manager of the Entity, intervened in 2018 and for which she was congratulated by parties from across the political spectrum - as well as at European level, where we have received 3 awards from the prestigious IPE magazine. 13 Geroa Pentsioak, Entidad de Previsión Social Voluntaria de Empleo Social impact 2019 22 Workers 10.10% Investments in the Basque Country 100% Indefinite contract 7.1 millions Local investment 2019 1 Person recruited 195 New jobs in companies owned by Orza or directly 0% Turnover ratio 2 People in the Euskalit evaluation club 73% Women 27% Men on staff 50% Unions and 50% ADEGI at the Governing Board 9% 0-30 years 74% 30-50 Years 17% Over 50 10 Womens and 16 Men on the 1,274 Training hours Governing Board 86% Service in Basque 0€ Board Members remuneration Geroa has a Remuneration Policy approved by the Governing Board where the absence of Variable Remuneration is established.