EUROPE - Jacques-André Schneider, a prominent member of the European Association of Paritarian Institutions of Social Protection (AEIP) Scientific Advisory Board, has cautioned the European Commission (EC) on its remarks concerning tax incentives for privately-managed pension provision in Europe.

Schneider defended the tax incentives during a roundtable discussion at the Lombard Odier Darier Hentsch (LODH) conference on the future of mixed retirement financing in Geneva today.

David Eatock of the EC summarised a report on privately-managed pension provision in Europe published by the Commission earlier this week, arguing tax incentives are regarded as unlikely to increase saving levels. (See earlier IPE story: EC questions need for enhanced pensions framework)

"The report makes the point that tax incentives are not likely to increase saving levels across the board for everybody; not everybody earns enough to pay taxes, so the incentives are meaningless to them," said Eatock.

"They are very popular, but people need to think carefully how they are used. Tax breaks tend to be regressive and can be quite expensive," he added.

Schneider said in retort: "I would like to strongly disagree with the point of view [that one shouldn't give too much tax incentives]. I'd like to draw the EC's attention to the fact that there were experiments with tax incentives in different countries: when they took away these incentives, the pension funds just disappeared."

Schneider believes incentives are good as they encourage employers to pay in while tax incentives encourages individuals to react too.

"I would be very wary of this comment by the Commission," he concluded.

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