The European Commission is throwing its weight behind the development of a European personal pensions market, with commissioner Jonathan Hill saying it was one of the areas it was prioritising as part of its capital markets union (CMU) work this year.

Hill, the commissioner for Financial Stability, Financial Services and Capital Markets Union, said the commission would “shortly kick off work on laying the foundations for a stronger European personal pensions market”.

In a report, the commission said it would launch a consultation, before the summer, “as the first step in evaluating the case for a policy framework to establish a voluntary market for European personal pensions”.

It is also planning to carry out a study on the fiscal and regulatory approaches that support the development of personal pensions.

Speaking at a joint conference with the European Central Bank (ECB) in Frankfurt, Hill said: “We need to think about how we can encourage a more developed private pensions market across Europe.”

His comments were made in the context of an update on the Commission’s CMU project, with the Commission today publishing its first CMU status report, as well as a 2016 edition of its Economic and Financial Stability and Integration Review (EFSIR).

A European private pensions market can help to address the retirement challenges associated with Europe’s ageing population but it also has a role to play in developing capital markets, Hill said.

“The bigger the private pensions sector, the deeper the capital markets,” he added.

In its 2016 stability and integration review (EFSIR), the Commission analysed how private pension funds and public pension reserve funds could contribute to the objectives of the CMU, saying the results suggest that developing private pension saving may be a “promising avenue to explore”.

Hill reiterated comments made by others at the Commission that a European personal pension market would complement rather than replace state and occupational pensions.

The point was made last month by Jung-Duk Lichtenberger, from the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (FISMA), who said the Commission was aiming to have “an informed view” by the end of the year on whether to continue developing a pan-European personal pension product (PEPP).

Hill, meanwhile, today highlighted the contributions pension funds can make to the wider economy – by supporting long-term investments in infrastructure, for example. 

But he said only a few European Union countries had large private pension markets, such as Denmark, Finland, Ireland, the UK and the Netherlands.

Building up a European market for personal pensions could provide “the economies of scale we need to reduce cost and increase choice for savers who are putting money aside for their retirement”, Hill was set to tell delegates in Frankfurt.

The consultation, which is under preparation, is intended to identify what steps can be taken to develop a European private pensions market and to identify the barriers that need to be overcome.

According to the Commission’s CMU status report, its staff “will examine national experiences across the EU to identify the conditions for these markets to flourish, including the issues of consumer protection and transparency”.

The Commission will take into account advice coming from the European Insurance and Occupational Pensions Authority (EIOPA), expected to report next month on the outcome of a consultation on the development of an EU single market for personal pension products.

In February, EIOPA said a complementary second regime for pan-European personal pension products (PEPPs) would be the best way forward rather than harmonising existing directives.