The document discusses private equity fund investments by pension funds and implications for workers' capital. It covers: 1) The boom in private equity returns from 2002-2006 and increasing pension fund allocations to private equity. 2) Risk-based strategies pension funds employ like fund-of-funds and direct investments to diversify risks. 3) Issues with private equity governance structures and lack of representation for workers as investors. 4) Need for regulation reform following the financial crisis to strengthen financial oversight and protect workers' capital.

7. CalPERS’ private equity program (since 90, USD Bn) Source: CalPERS website 143% (cash out + remaining value) / cash in Investment Multiple 22.5 (proceeds distributed back to the investors) Cash Out 43.2 (un-funded commitments + remaining value) = Total Exposure 20 (as reported by the General Partner) + Remaining Value of the investments 23.2 (remaining contributions legally due to the fund) = Un-funded capital commitments 29.6 (effective contributions to the fund, including management fees) - Capital contributed (Cash in) 52.8 (legal obligation to the private equity fund over several years) Total capital commitments

8. Doubts about PE performance Source: JP Morgan Alternative Asset Survey (November 2007)

9. Loosening or removal of investment restrictions 2002-2006 Source: Source: OECD Survey of Investment Regulations of pension funds, July 2008, www.oecd.org/dataoecd/12/46/40804056.pdf

10. In need of harmonisation? 5% max; indirect restriction via caps on fees Spain 0% Prohibited Slovakia 3% 5% max (to be raised to 10%) Portugal 0% 10% max in CIS (incl. HF) Poland Approximately 2-3% Solvency requirements Netherlands Negligible 20% max in CIS (incl. HF); max 1x leverage; short selling, lending & borrowing prohibited. Italy Thought to be extremely low 10% max in unlisted securities (incl. HF) Ireland 0% 5% max Greece 3.10% Authorised since 1 st January 2007 Finland 10% max in unlisted securities (incl. HF); Short selling prohibited Estonia Solvency requirements Denmark Estimated up to 1% 5% max Czech Republic 1% (federally regulated plans) None* Canada 30% max in unlisted securities (incl. HF) Austria Average Exposure (% of AUM) Quantitative restrictions (% of AUM) Country

13. Asset portfolio composition AUM > 10% GDP Source: OECD Pension Markets in Focus 2007 www.oecd.org/daf/pensions/pensionmarkets & www.oecd.org/dataoecd/47/0/39510746.xls

17. Private equity portfolio strategies risk concentration management cost (excl. infrastructure & large buy-outs) 2+20% 2+20% 2+20% 2+20% 1+10% Portfolio companies General Partner Fund-of-funds Investor (limited partner) Investor (direct investment) Investor (limited partner) Portfolio companies General Partner Portfolio companies General Partner Individual company Portfolio companies General Partner (private equity firm)

19. Swedish PF investments – diverse portfolio strategies of which €952m in EQT 1624 13% Wallenberg family Investor n. a. n. a. n. a. AMF n. a. 204 n/a Alecta Concentrated 171 4% AP7 Concentrated 242 100% AP6 Highly concentrated (2/3 in EQT) 140 0.6% AP4 Highly diluted (over 50 funds) 685 3% AP3 Concentrated (less than 10 funds) 203 0.9% AP2 Portfolio strategy PE in €m (dec. 06) PE as % of total AUM State & occupational pension funds

28. A return to the 1950s conglomerates ? If so, PE firm and managers’ employer responsibilities could be activated

33. The cost of corporate short-termism *purchased by BoA for 50bn; ** purchased 1.2bn by JP Morgan Chase following offloading of toxic assets valued at 29bn onto US gvt; *** 2007 only; **** entered into bankruptcy on 15 sep 5.3 4 Lehman Brothers**** 7.1 5 Morgan Stanley 1.7 1.7 1 Bear Stearns ** 8.2 12.1 25 JP Morgan Chase 11.8 16.8 10 Goldman Sachs 5 7.8 25 7.5 Citigroup 2.2 14.4 1.2 8 Merril Lynch* 1.3 17.5 25 Bank of America Debts to executives Buy-Backs 2006-07 US gvt injection Other funds Non-OECD SWF