The solution to poor returns on pension savings is simple – create a pan-European fund to facilitate savings and investments based on long-term results, according to Karel Lannoo, president of the Brussels-based think tank Centre for European Policy Studies (CEPS).

At a press conference in Paris organised by Carmignac Gestion, Lannoo told IPE the European Commission would need to revise its proposals on long-term legislation.

He went on to say that the protection of the interests of private savers for their future pensions required four elements.

These, according to the results of a study sponsored by Carmignac in September 2012, require the harmonisation of markets to enable access to long-term products, the creation of a “portable” European product and the easing of investment in illiquid infrastructure investments across Europe.

Lannoo told the press conference of the dismal returns being achieved by third-pillar pension funds.

He slated the present status quo, referring to deficiencies observed in terms of governance, liquidity profile, asset allocation, investment practices, risk management and communication.

He also noted that the study, ‘Promouvoir l’épargne européenne et long-term’, highlighted that, at present, the debate was “confused”.

What is needed, according to Lannoo, is a fund structure that ensures transparency and allows for efficient scale and the optimal bundling of services.

While any development would be aimed primarily at individual savers, he told IPE, it could also be supported by funds managers holding occupational pension investments, on a fund-of-fund basis.

In an earlier statement, Carmignac emphasised the need for retirement savings that would stimulate capital markets as a driver for growth in Europe.

Lannoo said at the conference that long-term funds should achieve 2-3% in returns, before inflation.

He added that the study was now being considered by the European Commission, and had so far been received warmly be senior officials.

 

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