Pension industry split over urgency to boost coverage, says EC pensions head

Sections of the pensions industry disagree on how urgent it is to increase coverage, European Commission (EC) head of insurance and pensions, Tilman Lueder, has said, adding that his challenge is to “reconcile these opinions” while remaining neutral.

During a panel debate on removing barriers to the EU internal market yesterday, 9 October, at the CBBA-Europe Annual Conference in Brussels, Lueder was asked how urgent it is to increase supplementary pensions coverage.

“It really depends on who you talk to,” he said. For example, those from the occupational pension sector, “are not convinced that there is a new urgency”.

“They think there is obviously a need to increase supplementary pensions. There is obviously a need to increase the investment portfolio of occupational pension schemes. To diversify, possibly even scale up, but I don’t have the impression after these conversations that they think this is terribly urgent.”

Instead, they believe it should be a gradual process that is in course and should continue.

In contrast, Lueder said consumer associations think that there is a huge pensions gap and the EC should “nudge” the process to more supplementary pensions, a view that academics align with as they “identify a great urgency”.

“The challenge is how to reconcile these opinions because I’m not going to take sides… we need to make proposals that are acceptable to both sides,” he said.

In contrast, European Insurance and Occupational Pensions Authority (EIOPA) head of policy and supervisory convergence, Patrick Hoedjes, said he would be “a little bit less cautious of the risks of choosing sides because we don’t have the time of the usual European processes of finding the same ground where everyone is happy”.

He explained: “We are missing the point here that we are at a crossroads. The Europe that we know and love – that provides us with our liberties and freedoms - is becoming more and more under pressure in this world.

“We are becoming less relevant almost by the day. We see that our economies are lagging, we’re going into a world where it’s no longer a global economy but about the strongest and getting weaker is a problem for all of us.”

Hoedjes is becoming “more frustrated by the lack of pace” in pensions, and he wants to see some entrepreneurship to demonstrate there are “solutions possible even in these limitations” because we need it “more now than ever”.

Offering a solution, Northern Trust senior vice president, Benjamin Versluijs, said that solving the problem for European pensions can be done by using data in the right way.

“Whilst you will have probably for a length of time, different tax regimes, different requirements, etc, you can fix a lot through data sustainability,” he said.

Another panellist, Association of the Luxembourg Fund Industry (Alfi) senior vice president, David Zackenfels, said the current aim of the EC to create the Savings and Investment Union is “extremely ambitious”

“I think it is extremely challenging within four years to get any of the reforms, boosting investment, empowering people, supporting business, financial integration, while also removing barriers, financial literacy and infrastructure investment in the EU. I think it is a lot, and pensions are on top of all of this.

Therefore, Alfi believes that time is needed to address things that currently do not work.



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