EUROPE – Charlie McCreevy, the European Commission’s internal markets commissioner, has warned against “misplaced confidence” in pension provision.
He also signalled possible regulation on clearing and settlement – although there was unlikely to be any change in UCITS regulation.
“Europe’s citizens - looking to retirement in 10, 20, or 30 years time – should be confident that the politicians of today are taking the appropriate steps to ensure the adequacy of provision of pensions tomorrow,” McCreevy told a conference in Dublin today.
“Quite candidly,” he said, “such confidence would currently be misplaced.” He added: “Many member states’ current demographic trends and poor economic performance point in exactly the opposite direction.”
He said it was “hardly surprising” that rating agency Standard & Poor’s recently warned that some EU states’ debt could fall to junk bond status in the longer term.
He said: “The implications of this in terms of substantially increased borrowing costs– converging with the costs of a rapidly rising dependency ratio- should be a wake up call to member state governments everywhere in Europe.”
And he pointed out that the demographic and pensions issue was another reason why the recent proposed changes to the pact which governs the euro should not be seen as “an escape hatch from fiscal discipline”.
“If politicians across Europe duck the challenges now, Europe’s next generation of pensioners will live in penury, emerging markets outside of Europe will rapidly pass us out, and our children and grandchildren will not forgive us.”
McCreevy also made remarks about regulations for clearing and UCITS investment funds. He said: “We might regulate on clearing and settlement – a regulatory impact assessment is under way. But before we do I will need to see persuasive evidence that regulation is necessary.”
And he added that the Commission’s paper on UCITS would be published in the summer, saying: “It will conclude that no case currently exists for wholesale changes to the existing legislation.” The industry will be asked to respond by November 2005.