On Tuesday 17 February, European finance ministers held an initial exchange of views on the measures presented last November by the European Commission to facilitate access to pension schemes to supplement public pensions, as part of the progress of the Savings and Investment Union (SIU) project.
The legislative package aims to ensure adequate pensions for Europeans, in particular by encouraging more attractive and more advantageous investments for savers. While the management of pension systems remains a national prerogative, on Tuesday, EU Member States acknowledged the scale of the common demographic challenge posed by Europe’s ageing population.
“We are all aware of the constraints and problems associated with the long-term sustainability of pension systems”, said Portuguese minister, Joaquim Miranda Sarmento.
“It is our common task to ensure that people who have worked hard have a sufficient income when they retire”, argued the German minister, Lars Klingbeil, referring to “the cohesion of our societies”.
“Pension provisions are crucial in protecting against poverty and in ensuring that individuals can maintain an adequate standard of living in their retirement”, added the Irish Deputy Prime Minister, Simon Harris.
“The recommendations addressed to the Member States go in the desired direction of strengthening the sustainability and adequacy of European pension systems, while promoting their role as long-term financiers of the real economy”, said Riccardo Barbieri, Director General of the Italian Treasury.
Striking a balance within the Union. While several European countries have recently announced reforms “aligned” with the European Commission’s objectives - notably the Italian reform of supplementary pension provision (‘fondi pensione’), Germany’s ‘early start pension’ (‘Frühstart-Rente’) and Ireland’s ‘My Future Fund’ auto-enrolment system - other countries on Tuesday recalled the solidity of pension schemes that have been firmly entrenched in their national landscape for many years.
“Well-funded pension arrangements like we have in the Netherlands, Denmark or Sweden are extremely important”, stressed Dutch minister, Eelco Heinen. “Changes to the rules can only be made in a way that does not disturb well-functioning schemes such as in the Netherlands”, he emphasised.
“We believe that [the directive] should take account of the fact that the structuring of pension systems is a matter for the Member States and that it must take sufficient account of the differences between pension systems and the specific features of the business models of the institutions that manage pension schemes”, said Bulgaria’s Permanent Representative, Rumen Alexandrov.
The European Commission assured that it has taken this issue into account. “When drafting and defining the policy orientation, the Commission took particular care to ensure that the competences and responsibilities of the Member States with regard to pension systems, labour and social legislation, as well as the role of the social partners and taxation, were respected. The package also recognises that national systems are very diverse”, said Maria Albuquerque, European Commissioner for Financial Services and the Savings and Investment Union.
Specific sensitivities. In addition to their general considerations, most ministers expressed their desire for specific adjustments in this legislative package, which includes a revision of the Institutions for Occupational Retirement Provision Directive (‘IORP II’) and the Pan-European Personal Pension (PEPP) Regulation, as well as a recommendation to set up system for the auto-enrolment of employees in supplementary pension products (see EUROPE 13756/14).
With regard to the revision of IORP II, Belgium, Luxembourg, Austria and Denmark warned against the risk of additional administrative burdens and insisted on the need to strictly apply the principle of proportionality, particularly with regard to small funds and supervisory authorities.
On the PEPP, several countries - including Austria, Hungary, Bulgaria, Ireland and Romania - expressed reservations about the tax provisions. However, they supported efforts to simplify the product, provided a high level of investor protection was maintained.
The EU Council is moving quickly to begin work on the ‘market infrastructure’ package. The Cypriot Finance Minister, Mákis Keravnós, indicated on Tuesday, during the meeting of ministers, that a third meeting of experts would be held in the next few days on the ‘market infrastructure’ package, presented in early December by the European Commission (see EUROPE 13766/17).
The legislative proposal had already been examined a first time under the Danish Presidency, then a second time in January under the Cyprus Presidency. “Our plan is to make as much progress as possible on these complex and important files of the package”, said Mr Keravnós. (Original version in French by Bernard Denuit)