McGuinness stresses importance of CMU in pension systems

European Commissioner for financial services, financial stability and the capital markets union (CMU), Mairead McGuinness, has stressed the importance of the CMU in pension systems.

Speaking at the launch of European Retirement Week today, 29 November, McGuiness said an important step in ensuring European citizens have enough income in their retirement is to complement good state pension systems with “high-quality, safe and cost-effective supplementary pensions”.

“As the European Commissioner for financial services, I’m committing to build a truly single market for capital across the European Union – the Capital Markets Union,” she said.

“Developed capital markets can support pension systems and contribute to long-term social goals, like increased pension adequacy. If they are designed in an inclusive way, they could help meet the needs of our ageing population. The CMU can help Europeans invest and save for the long-term futures, the more developed capital markets are, the easier it will be for citizens across the EU to access financial products that match their needs and preferences. When the commission presented a new capital markets union action last year we made sure to include retirement saving as an action point. Our goal here is to foster transparency and support good practices,” she said.

The commission has recently published a study analysing existing auto-enrolment practises in a number of EU and non-EU countries, in which it proposed best practises for such systems. McGuinness hopes that the findings will inform ongoing discussions on pension reform in several member states.

“We also want to identify best practices in setting up national tracking systems for individual pension rights and we want to explore the possibility of a pension dashboard to get a better view of the sustainability and adequacy of national pension systems. Last year we asked the European Insurance and Occupational Pensions Authority (EIOPA) for technical advice on these two measures,
and we expect their recommendations soon.

Continuing, McGuinness said: “Well-developed capital markets also require institutional investors who can invest with a long-term perspective. The commission wants to encourage investment in the European Union and support the flow of capital towards infrastructure and long-term sustainable projects. But often larger institutional investors, for example, insurance companies, are reluctant to invest in infrastructure because prudential requirements mean they must hold a high level of capital against those investments.

“In September, we adopted the commission’s review of the solvency II framework – this review will release up to €30bn of capital fostering the insurance sectors investment capacity and we’re doing not as a gift to the industry but to allow insurers to boost sustainable investments with a long-term view and it will help deepen the capital market sector.”

She concluded that European Retirement Week is a unique opportunity to come together to think about what is working in Europe and where we can do better.

“The commission is working on measures that can help national governments deliver good and sustainable pension systems, and we’re developing the capital markets union, which can help meet the needs of an ageing population.”

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