A cornerstone of the European Commission’s plans for Capital Markets Union (CMU) is to boost the level of savings going into investments. The principle being if you link long term savers to long term investments you get the double benefit of better retirement provision and deepening capital markets options for business finance. The challenges to progress are significant but given the right level of engagement by industry and genuine political support the size of the prize is substantial.
At the recent European Commission conference to discuss initial proposals for EU personal pension products, policymakers and industry came together to discuss what the priorities should be (further details available).
Vice President Dombrovskis, the Commission official responsible for CMU, spoke of the need for a solution to Europe’s retirement provision, saying that by 2060 there would be only two working citizens for every one citizen aged over 60, down from four now. This implies an impossible burden on future governments’ social provisions. He highlighted early findings from the Commission’s consultation, giving an indication of likely direction of focus:
Gabrielle Bernardino, Head of the European Insurance & Occupational Pensions Authority, the watchdog for pensions across Europe, together with advocates for an EU framework, said not enough was being done to make private regimes available. He called for:
Industry speakers highlighted the practical challenges, including:
The Commission clearly means business and proposals are likely to advance swiftly during 2017. Given the potential size of the European market, industry should be getting behind proposals to help think through how to overcome the obstacles.