PensionsEurope answer to the EC consultation on the CMU mid-term review 2017

In its answer to the European Commission (EC) public consultation on the Capital Markets Union (CMU) mid-term review 2017, PensionsEurope lists numerous actions that the EC should take in order to complete the current CMU programme. Particularly, PensionsEurope gives policy recommendations on fostering long-term investments in infrastructure and real estate, on sustainable investments and on the use of derivatives to hedge risks. For example, PensionsEurope notes that there should be enough “big” investment opportunities available across Europe that match pension funds’ needs.

After two years from the publication of the EC’s green paper Building a capital markets union, PensionsEurope stresses that there is still a lot to do for the EC and Member States. PensionsEurope calls for them to remove all the remaining barriers to cross-border investment, and particularly:

  • More standardization and transparent information would increase pension funds’ investments in alternative investments, such as: non-listed companies, private equity and debt, real estate, and infrastructure;
  • The upcoming code of conduct on withholding tax (WHT) relief principles should be ambitious and PensionsEurope would also welcome a Directive in this field.

PensionsEurope highlights that legislation should never discourage long-term investments. Therefore, imposing inappropriate quantitative measures or capital requirements on pension funds, or imposing a short term risk free discount rate to value their liabilities would have negative effects on pension funds’ investment capabilities. Furthermore, because of negative consequences to the real economy and pensions, a Financial Transaction Tax (FTT) should not be introduced, or at least pension funds should be fully excluded from it.

As promoter of workplace pensions, PensionsEurope invites the EC to investigate how to increase the good implementation of the IORP II Directive in countries with low or no workplace pensions.