Brussels, 08/05/2007 (Agence Europe) - On Tuesday 8 May, EU finance ministers were given the financial services committee's (FSC) report on the implications of ageing populations for financial markets. In the conclusions which were adopted, they generally accept the report, stressing that on several points there is a need for member states to monitor and take action. They say that there is a need to “significantly” step up efforts to raise households' information and awareness. The FSC notes that in terms of demand for financial products, the main problem was the persistent difficulty of informing and educating households. This problem had several facets: the lack of awareness-raising for households on the need to fund their retirement; the lasting effect of insufficient financial education; the lack of objective, complete and comprehensible information whether from authorities or financial institutions. Ministers, therefore, call on member states to consider “additional solutions so as to increase the participation and contribution levels of households in non-statutory pension schemes,” with particular attention to low income households.
In terms of supply of long-term financial products, the Ecofin Council wants to encourage the industry to “further enhance the supply of pension savings products”, while ensuring that there is a fair competitive environment and adequate prudential supervision. The “standards of advice and customer support” must also be raised in order to ensure proper matching between the consumer profile and the nature of the investment proposed. To this end, the Council invites the Commission to “investigate whether further work is necessary for the development of a single market for retirement products”.
The fact that households increasingly prefer private retirement plans to other forms of savings will increase the share of long-term savings, principally through life-assurance, investment funds and professional retirement schemes, says the FSC. It notes that the general trend of transferring responsibility for funding future retirement pensions from the government and companies to households means that it is households who have to manage and/or bear additional, often more direct, risks. (mb)