EUROPE – Charlie McCreevy, the European Union’s internal markets commissioner, says UCITS investment funds are a ready-made solution for defined contribution occupational pensions.

“An efficient investment fund industry can help Europe meet pressing structural challenges,” McCreevy told a hearing on investment funds in Brussels today.

“Put household savings to work in the real economy. Strengthen financial stability by diversifying risk. Democratise European financial markets. Drive higher standards of corporate governance. Become the vehicle of choice for private retirement provisioning.

“They can also serve as a ready-made investment solution for occupational pension schemes. In the US 25% of the assets of retirement accounts are invested in mutual funds.”

“Pension funds, their managers and contributors should not be denied access to investment opportunities by outdated regulatory distinctions,” McCreevy added.

He said UCITS funds are a “natural vehicle” for retirement savings. “In particular, they may be a candidate for investments from defined contribution occupational schemes.

“The fund industry needs to look further at how investment funds can be packaged in a product which pays-out over the duration of retirement.”

McCreevy’s comments are likely to please European investment fund trade body EFAMA, which has been promoting the idea of using UCITS as retirement vehicles.