EUROPE – Marek Gora, one of the architects of Poland’s pension reform, has called for a single European pension taxation and fee regime.
Writing in a magazine article, Gora and co-author Jim Kernan say the EU directive on institutions for occupational retirement provision that comes into force this year is good first move – but more needs to be done.
“While this directive is an important first step to creating a single pension market, the pension system in Europe faces a number of structural issues that will require reform at the EU level and at the national government level of voluntary pensions, but especially of universal pensions systems,” they write in European Business Forum.
“To be successful, the EU will need to break some stereotypes around long-term financing to make pensions viable and user friendly by enforcing regulatory equality.”
“What is most critical for Europe is to choose one tax and fee regime for each type of pan-European pension programme, whether universal or voluntary (occupational), and stick to it.
“Such reform should garner broad support from other EU financial, labour market and tax policy reform stakeholders, as this type of pension reform will result in a variety of positive effects.”
They said such a move would result in improved labour mobility and employment as well as expanded capital markets and a decline in government debt.
“Future efforts will needs to put much more focus on the financial sector niches of universal and voluntary pensions,” they write.
“These efforts will need to be more aggressive in reforming inter-generational operations of universal pensions, as well as harmonising pension programme application across the EU.”
Professor Gora, who lectures at the Warsaw School of Economics, was one of the authors of Poland’s second-pillar pension system that was introduced in 1999. Kernan specialises in pensions at PricewaterhouseCoopers.