EFR calls for pan-European pensions approach
BELGIUM - A group of Europe's leading banking and insurance companies is calling for a new common structure for pension products sold anywhere in the EU, in the hope that this will lead to convergence of national pension systems.
"To have the same pension products provided and bought throughout the European Union must be of great benefit to the people and be easier to regulate and supervise," said EFR chairman Pehr Gyllenhammer, who also heads UK finance firm Aviva.
In a new report, the European Financial Roundtable has argued that the traditional approaches to pension reform are unsatisfactory. Pension systems tend to be closely linked to national tax, social and labour laws - competences that are all jealously guarded by Member States.
The EFR therefore recognised that direct harmonisation of national pension systems is not, for the moment, a realistic option. Similarly, the alternative route of mutual recognition of pension products by Member States is also fraught with difficulties and would require protracted negotiations between countries.
A better solution, said the EFR, is to establish a common pan-European pension structure to complement national pension schemes. To start with, it would work alongside existing structures, but could eventually lead to convergence of national systems.
The EFR is not, at this stage, making any concrete recommendations, but rather launching a debate that it hopes will lead to more detailed specifications, a process that could take another five to 10 years. The EFR pointed out that the scale of Europe's pension crisis is so enormous that the EU cannot afford to delay in creating a single market for pensions.
The industry group lists three elements that it would like to see in a common pension structure: that the pension plans are individually owned, that they are easily recognisable to consumers throughout the EU, and they offer tax incentives for investors and discouragement of early withdrawal.
Back in May, a high-level group of pension experts also suggested to the Commission that a pan-European pension structure could facilitate convergence of national systems - but warned that careful study would be needed to avoid introducing additional costs for minimal benefits.
The EFR was formed in 2001 to provide an industry voice on European policy issues relating to financial services. Its members include representatives from ABN Amro, AEGON, Allianz, Assicurazioni Generali, AXA, Barclays, BBVA, BNP Paribas, CGNU, Deutsche Bank, Fortis, ING, Munich Re, Nordea, the Royal Bank of Scotland and UniCredito Italiano.