EU Commission ‘expert group’ advocates collective pension schemes

The European Commission’s high-level group of experts on pensions has advocated the use of collective pension plans to ensure risk sharing between members.

The suggestion is one of several areas of interest recommended in the group’s final report. The group was established in 2018 and includes representatives from several sectors and countries within the European Union (EU).

It said that the EU and member states should conduct “further in-depth analysis” to identify gaps in the old-age protection systems. This includes areas such as gender lines, professional groups and age cohorts.

The report urged member states to create or retain a “pension-friendly legal environment (social, labour and tax law) and appropriate prudential framework”. Countries were also advised to take a “long-term and holistic approach” to develop a multi-tier pension system.

“Occupational pension schemes are characterised by a social purpose and, depending on the national strategy, can play a central role in old-age income replacement. Both member states and the EU should actively support, strengthen and promote social dialogue and collective bargaining to foster the development of occupational pensions with broad coverage.

"Personal pension schemes, as voluntary individual products, are a useful component of a diversified and balanced pension system in some countries and can play an important role in supplementing retirement income,” the report stated.

However, the group acknowledged that due to “widely varying architecture” of member state pension systems, there are “no one-size-fits-all solutions”. Despite this, it made several suggestions that it believes all member states should focus on.

Of those, risk sharing was recommended, with countries told to provide “financial and regulatory incentives” to encourage social partners to “set up collective pension plans that ensure risk-sharing between members, while respecting the autonomous competences of the social partners and the sponsoring companies”.

Another suggestion, aimed at resolving the gender pensions gap, was for occupational pensions to provide pension credits for career breaks linked to childcare and other caring responsibilities. The group said this would protect the “accrual of pension rights and encouraging equal sharing of care responsibilities between women and men”.

Furthermore, the report said that countries should reserve tax and/or financial incentives in both the saving and the pay-out phase for supplementary pensions meeting minimum quality requirements. “These incentives should reflect the diversity in characteristics of types of pensions and the related social policy of a member state,” the report said.

The group also recommended the EU, member states and social partners develop cost-effective tools and methodologies to assess the vulnerability of European pension providers in the EU to long-term environmental and social sustainability risks. It also said the EU should “establish a regular multi-stakeholder forum of structured exchange between social partners, pension providers, beneficiary representatives, independent experts and EU authorities on pensions”.

In response to the report, PensionsEurope CEO/secretary general, Matti Leppälä, said: “As HLG member, I’m happy that the European Commission set up this work in 2018 and that today we have the final report. I am confident it contains useful analysis and reflections for policy makers, social partners and other stakeholders. I hope that the new European Commission can benefit from this work and takes forward measures that enhance the role of supplementary pensions in Europe.”

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