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Pan-European pension plans key to improving consistency

Written by Francesca Fabrizi
5/10/2010

EFAMA has reinforced its call for the introduction of a pan-European personal retirement plan that would offer improved consistency across Europe.

The investment management association, which yesterday hosted a conference on long-term savings, used the event to highlight the benefits of a single market for personal pension plans, particularly in terms of portability and mobility; the appropriate requirements to enable such a plan to exist; and the regulatory initiatives that should be taken to help pan-European retirement plans of this nature to develop.

The conference discussions were centred around EFAMA’s proposal to launch an “Officially Certified European Retirement Plan” (OCERP), one of the key recommendations in its Think Tank report, Revisiting the Landscape of European Long-Term Savings, published earlier this year.

It was agreed at the event that the demographic challenge would give rise to greater individual responsibility for securing adequate retirement income. Many European households would therefore have to save more, longer and better for retirement. In addition, in order to achieve their savings targets, households would need the highest possible return on their long-term savings. Standing in the way of this is a highly inefficient pensions market in Europe where fragmentation of markets is too high, access is too limited, costs are too high, innovation too low and choice too limited.

To overcome these problems, said EFAMA, the development of a single market for pan-European pension products would represent an important step forward towards overcoming these problems, leading to lower costs of pension provision and higher returns.

Jean-Baptiste de Franssu, President of EFAMA, commented: “It is our duty as an industry to take part in the debate begun with the publication of the Green Paper on pensions. Modernising pension policy in the EU is a must."

Last week, the Association of the Luxembourg Fund Industry (ALFI) announced its support for the creation of the OCERP, and recommended backing up OCERPs with the internationally recognised, EU-regulated UCITS investment funds.

Alfi Chairman, Claude Kremer, commented: “The creation of a pan-European retirement plan is an ambitious goal. But the example of UCITS shows that, with will and perseverance, the EU can be a world leader in providing investors with high-quality, safe solutions to their savings needs. Investment funds are a key tool to address the pension challenge, given their ability to deliver long-term performance that preserves the real value of individuals’ retirement savings.”

Asset management company, Carmignac Gestion, has also offered support for the proposal which, said Eric Helderlé, Carmignac Gestion’s managing director, would “increase competition between the actors within this sector and benefit the end investor. In the current climate of weak economic growth and low interest rates, it is important to rapidly come up with dynamic savings solutions designed for the long-term horizon”.



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