German occupational pension association Aba has expressed doubts about the plan by the European Commission to launch new savings products within the framework of the Savings and Investments Union, to invest occupational and private pension assets in the real economy.
According to aba’s deputy secretary general Cornelia Schmid, the Commission’s main goal is to find ways to invest pension savings to support Europe’s economy and the single market, while the Directorate General for Employment, Social Affairs and Integration, responsible for social and labour affairs, has not yet been involved in discussions, including on pensions policy.
Aba is proposing a discussion on social and political issues on pensions at European Union level within the framework of the European Pillar of Social Rights, under the leadership of Roxana Mînzatu, EU commissioner responsible for social rights, instead of treating pensions as a financial issue under the leadership of Maria Luís Albuquerque, the EU commissioner for Financial Services, Savings and Investment Union.
Albuquerque is tasked, among other things, with developing simple and cost-effective savings products at EU level and examining whether tax incentives are possible for these products.
Strengthening a capital-funded pension provision is necessary not only in Germany, but in most EU member states, Schmid wrote in an article for the association’s publication BetrAV, warning however that introducing new pension products won’t solve the issue.
In Germany, stakeholders and experts involved recently in the process of reforming the second and third pillar pension systems did not identify the lack of pension products as a problem to reinforce the pension system as a whole, according to Schmidt.
“We are not aware of any [EU] member states that are “only” lacking one product when it comes to expanding [capital] funded pension provision,” she wrote in the article.
In her article, Schmid pointed to the reports of former Italian prime minister Enrico Letta and former European Central Bark’s president Mario Draghi – Much more than a market and The future of European competitiveness, respectively – addressing issues relating to investing savings to support Europe’s real economy and innovation.
Letta suggested the introduction of a mandatory automatic enrolment EU Long-Term Savings Product, or a workplace savings product, and to simplifying and upgrading the Pan-European Personal Pension Product (PEPP), while Draghi suggested creating a solid financing environment for disruptive technologies and start-ups backed by institutional investments and EU pension plans.
Likely, both Draghi’s and Letta’s reports will guide Albuquerque’s mission to create an EU Savings and Investments Union.
Aba’s deputy secretary general noted in her article that the reports lack thoughts about the payout phase of long-term EU savings products, and questions on how new, subsidised EU savings products in the second pillar pension system would impact existing pension provisions remain unanswered so far.
Schmid also disputed the fact that EU savings products should rank higher than an existing occupational pension plan in member states.
The Commission yesterday released its 2025 Work Programme, which sets out key strategies, action plans and legislative initiatives that will form the building blocks for the further work during this term to respond to its “ambition to build a strong, secure and prosperous Europe”.
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