In our input to the European Commission, PensionsEurope supports a balanced approach to the convergence of capital market supervision. PensionsEurope believes that a vibrant Capital Markets Union, which provides European pension funds with long-term investment opportunities to achieve good returns for members and beneficiaries, requires robust supervision of market participants. Occupational pensions are still very divergent across member states, both in terms of their prevalence and design. They are closely linked to first pillar pensions, as well as social and labour law more broadly. Importantly, the strong link between occupational pensions and national tax and labour law has resulted so far in relatively limited cross-border activities of IORPs. For these reasons, the rationale for a bigger regulatory or supervisory role for EIOPA on IORPs is absent. Nonetheless, we have seen a clear impact of EIOPA on the regulatory framework. Both EIOPA’s own Opinions and its work on Level 2 in the area of insurance have a significant impact on the supervisory activities of National competent Committees across Europe.Finally, since its inception, the mandate of ESMA has been expanded significantly, particularly in areas with strong financial stability or cross-border aspects. Pension Funds have supported the strengthening of this mandate.However, PensionsEurope believes that ESMA faces challenges due to the EU framework’s persistently poor design.
In its position paper, PensionsEurope welcomes the efforts of the EU to increase the digital operational resilience of the financial sector and we recognise the importance of enhancing knowledge sharing and cooperation across the EU. We agree with the importance of a sound governance and risk management system to prevent and limit the impact of ICT-related incidents, disruptions, and threats.
We recognise that the financial sector is not homogeneous: as also the EC has correctly noted, significant differences exist between various financial entities in terms of size, business profiles and in relation to their exposure to digital risk meaning that also the consequences from cyber risks and ICT-related incidents faced by various financial entities differ greatly from one entity to another.
PensionsEurope believes that it is crucial that the specificities of IORPs are better reflected in the DORA requirements and that IORPs could at least benefit from a more proportional treatment in this context, thus not jeopardizing the societal goal of IORPs to provide an adequate pension income for their members and beneficiaries.
In our input to the European Commission, PensionsEurope supports the Commission’s objective to simplify the life of taxpayers operating in the single market and we welcome the review of the VAT rules. In general, we believe all pension fund participants should be protected from unnecessary VAT burdens, regardless the character of the schemes as well as the Member State in which the services are being received. The current exemption for special investment funds should be extended to all pension schemes.
Even though the VAT exemption is in place, in some countries there is a stamp duty (for instance 4%) that is not subject or exempt from VAT and there is no possibility of any deduction. We urge the EC to recommend Member States to exempt (at least) pension schemes from this duty (or decrease their duty to no more than 1%).
Finally, we believe that establishing a cross-border investment-friendly tax environment in the EU not only requires removing unfair tax treatment but also introducing tax incentives.
On 21 April 2021, PensionsEurope submitted a response to the Commission’s Green Paper on Ageing, demographic change in Europe.
PensionsEurope welcomes the Green Paper on Ageing and believes this paper is a good starting point to launch a debate on the main impacts of the demographic transformations in Europe.
As representative of national associations of pension funds and similar institutions for workplace and other funded pensions, PensionsEurope believes one of the main needs people have is to enjoy an adequate standard of living in retirement, which implies having good pensions. We think more needs to be done at the EU and national levels and with the involvement of the social partners and all interested stakeholders to ensure that all people will enjoy adequate living standards in old age.
PensionsEurope believes the Green Paper should reflect more on the role that workplace pensions can play to (a) provide people with additional retirement income, (b) keep pension systems sustainable in the long term, and (c) contribute to economic growth in Europe. The Green Paper, the debate that will follow, and the measures that eventually will be considered by the European Commission should include policies and initiatives aimed at facilitating and encouraging participation in workplace pension schemes. Workplace pensions are essential for the adequacy and sustainability of our pension systems. PensionsEurope and its members are strong supporters of multi-pillar pension systems able to provide adequate and sustainable pensions to people in Europe.
You can read our contribution here.
The World Pension Alliance (WPA) published the paper on ‘2020 Global Regulatory Responses and Pension Fund Challenges Related to the COVID-19 Pandemic’, providing an overview of the challenges that both pension funds and pension plan members faced during 2020 and promoting the adoption of policies with a long-term view toward retirement security. The research underlines the damaging effects of specific policies such as pension withdrawals, without overlooking the current difficult situation of many workers all over the globe. With that in mind, the paper summarizes the challenges and global regulatory efforts in response to COVID-19 made in 2020 in different regions around the world in response to the COVID-19 pandemic and provides a brief analysis on sector developments since the beginning of the pandemic.
Even more so during the current pandemic crisis, pension funds serve a significant social function in supporting economies and citizens. They ensure benefits for old age income while they work as automatic stabilizers in times of economic strain. Because employers’ and employees’ representatives are involved in the management of workplace pension schemes, such schemes help to promote transparency, inclusiveness, and democratic legitimacy. Most notably, pension funds are important institutional investors and can foster long-term investment and sustainable economic growth while maintaining financial stability. They often act countercyclically by maintaining their long-term strategic asset allocation in stressed market conditions, in that they rebalance and buy assets whose prices have diminished abruptly.
PensionsEurope is delighted to organise its 2021 annual conference "Adequate and Sustainable Pensions" online on 9 & 10 June 2021, 10:00 - 13:45 with its event and media partner IPE.
The PensionsEurope annual conference brings together leading experts in pensions, as well as pension professionals and EU officials to exchange views and best practices on the most relevant and topical issues in the pensions landscape. We will focus on the main trends concerning workplace pension provision in EU Pension Policy, Sustainable Finance, the low interest rate environment and communication in pensions. All of this will be discussed against the background of Covid-19 and the aftermath of this ongoing crisis.
Save the date in your agenda and keep an eye on our website here for more information!
On 12 March 2021, PensionsEurope answered to the European Commission targeted consultation on the establishment of a European Single Access Point (ESAP).
PensionsEurope welcomes the initiative of establishing an ESAP, a platform that should primarily be meant to provide useful information for investors, in particular to comply with the Sustainable Finance Disclosure Regulation (SFDR), the Taxonomy Regulation and the Non-Financial Reporting Directive (NFRD). PensionsEurope recommends the European Commission to adopt a phased in approach for the ESAP, firstly focusing on ESG data. An ESAP focusing on ESG is in line with the joint industry letter calling for the creation of a European ESG database. Robust, comparable and reliable ESG data is necessary for identifying and assessing sustainability risks and key for enabling pension funds to steer their portfolios towards sustainability objectives. Pension funds increasingly want to incorporate sustainability considerations in investments but at times face data constrains, as data is not always available or is only available at a significant cost. The ESAP initiative could address this challenge, in combination with an ambitious review of the NFRD. Once the ESAP is up and running, it could be extended to other areas.
In our answer, you can read more about our specific considerations on the objectives/characteristics of the ESAP, on the challenges faced when searching and using data, on the scope of ESAP, on its usability and accessibility, governance, costs and benefits.
PensionsEurope and ITN Productions Industry News launch a bespoke co-production to raise awareness and understanding of the importance of good pension planning, the vital role of workplace pensions and the opportunities and challenges for future pension investments.
In a press release issued today, PensionsEurope corrects the conclusions from Better Finance on the Bulgarian pension funds. Making use of incorrect data, Better Finance declares that Bulgarian private pensions have failed and goes as far as to recommend reversing the private pension reform of 2000 which means nationalising individual pension savings in Bulgaria. Not only would this have a detrimental effect on Bulgarian pensions, it also strongly contradicts with numerous European policy recommendations that highlight the importance of strengthening supplementary pensions in order for all Europeans to have adequate and sustainable income in old age. Read more in our press release.
PensionsEurope welcomes the ECB review of its monetary policy strategy which has undergone a process of gradual transformation since it was adopted in 1998. Today the euro area is facing various new economic challenges, such as the COVID-19 crisis, and there will be many new challenges to overcome in the upcoming years which need to be jointly tackled by monetary, economic, and fiscal policies.
As despite negative interest rates and QE programmes the ECB has not achieved its inflation target over the last years, possibly the ECB could be more flexibility around its inflation target and consider targeting price growth in a band, in full respect of the ECB’s price stability mandate as enshrined in the Treaty.
In general, we believe that unconventional monetary policies have had effect in many areas, including various positive and negative side effects. This applies for the economy at large, as well as for pension funds more specifically in the form of preventing a (severe) recession, realising relatively good returns but also substantially more expensive liabilities. You can read our input to the ECB review of its monetary policy strategy here.