The German government will continue to push for progress in the second and third pillars of its pension system in the context of the Capital Markets Union (CMU), as it reaches the last month of European Union presidency, said Jörg Kukies, state secretary for Financial Market Policy and European Policy at the Federal Ministry of Finance.

The CMU is an EU initiative which aims to deepen and further integrate the capital markets of EU member states with an aim to increase options for savers across the EU, facilitate cross-border investing and attract more foreign investment into the EU, among others.

The preparatory work for this already took place between the French, German and Dutch governments and it has continued with the high level-working group appointed by the EU Commission, he said.

Speaking at the Handelsblatt annual conference on occupational pensions, Kukies said that capital-covered retirement pension provisions are an “absolute key project” to build a CMU for both the German government and the EU.

“This is one of the most important issues of our EU council presidency and it will be made clearer in the next weeks,” he added.

The German government has succeeded in moving the CMU up high on the EU Commission’s agenda despite the COVID-19 crisis, he said, adding that it will seek to pass a resolution in December to clearly define the support of the member states for the Commission relating to the CMU.

An important element in the definition of the CMU by the EU Commission is the support of long-term investment schemes, he said. “For us, it is very important to encourage long-term savings and investments,” Kukies added.

The low interest rate environment remains a challenge, however. He said guarantees have to be redefined if interest rates will remain low for a long time. “We have to find new ways,” he added.

Change in business models, he noted, in line with the low interest rate environment are necessary, but preserving benefits is at the same time important to keep trust in the system.

The occupational and the private retirement provisions have to be “reinforced”, he said.

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