EUROPE – The creation of a single market for pensions in Europe would create substantial benefits for consumers and encourage economic growth, says the European Financial Services Round Table (EFR), the pan-European association of financial services groups.
However, the EFR warns that most people in Europe remain unaware that their pensions expectations are unlikely to be met by the traditional state pay-as-you-go systems.
In a report on the benefits of a single pensions market, the EFR says the recent proposal for a directive on pan-European occupational pensions is a breakthrough, but the EU needs to take measures to improve taxation, worker mobility and pension scheme transparency and security if the directive is to be successful.
Moreover, the EFR argues that the success of the directive depends on how quickly it can be implemented at national level. At present, the variety of national pensions systems imposes unacceptable barriers and severe taxation costs when workers move between member states, says the report.
The report also says that closer integration of the European pensions market can be achieved by encouraging growth in the private pensions market.
London-based Pehr Gyllenhammar, chairman of the EFR, believes encouraging growth in the private sector could ease the burden on Europe’s first and second pillar systems.
“Europe’s politicians must create a single pensions market that increases consumer choice reduces costs of schemes, whilst encouraging generally the take-up of private plans, not just occupational pensions,” he says.
Gyllenhammar argues a more integrated pensions market is achievable, provided the industry receives adequate political support. “What is needed is political will and we call on politicians both at European and national level to take the initiative now before Europe's pension nightmare comes true," he warns.
The European Financial Services Round Table was formed in 2001 to provide an industry voice on European policy issues relating to financial services.
Its members include representatives from ABN Amro, AEGON, Allianz, Assicurazioni Generali, AXA, Barclays, BBVA, BNP Paribas, CGNU, Deutsche Bank, Fortis, ING, Munich Re, Nordea, the Royal Bank of Scotland and UniCredito Italiano.