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 is delighted to announce a new partnership with ITN Productions Industry News to create a news-style programme #InvestingintheFuture raising awareness of the importance of pension planning in a pandemic informed world.
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.
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.
On June 30, PensionsEurope submitted its feedback to the High-Level Forum CMU report. You can find our feedback here.
PensionsEurope submitted its comments to the EIOPA consultation on the PEPP ITS supervisory reporting and cooperation. You can find our comments here.
Together with various firms and institutional asset managers, PensionsEurope, Pensioenfederatie, iapf and Insurance and Pension Denmark submitted a joint response to the ESMA consultation on central clearing solution for pension schemes arrangements. The response highlights that if pension funds are required to clear their derivatives and to post cash as variation margin, we need to ensure that liquidity will be granted in the repo markets in times of market distress and set up collateral transformation arrangements with central banks. Central banks would provide a facility that would allow pension funds to transform high quality collateral to cash, at a haircut and cost. A high credit-quality, regulated entity would intermediate between pension funds and central banks. This entity could be an existing CCP, or any other regulated entity set up purely for this purpose