30 September 2004

EFR proposes debate on pensions

The European Financial Services Roundtable today published its recommendations on Pan-European pensions. Rather than embedding new rules in the national structures of all Member States, the European Union should create a Pan-European pension regime that can exist alongside the existing structures, EFR says.

Finding a way to allow the same pension products to be sold anywhere in the EU, subject to a single regulatory regime, should be a top priority. The EFR thinks the time is right to begin a debate on how to create such a structure. To start with, such a pension structure could operate alongside and complement existing national pension structures, which would be left undisturbed. From there, the spur of competition is likely to encourage the convergence of national systems.

Pan-European pensions will enable companies to offer similar pension plans to employees throughout Europe and will enable mobile workers to take their pension with them. The EFR researched the pension reality for internationally mobile workers in Europe and found that the widely different rules in the various EU Member States virtually make cross-border pensions impossible. Moreover, the rules are sometimes so complex that even experts have a hard time understanding the implications.

The EFR feels that the scale of the EU's ageing problem is so enormous that more radical alternatives to traditional approaches are necessary.

Pan-European Pension Plans (EPP's) as suggested by EFR will be highly standardised plans that can be provided all over the EU with identical basic characteristics. The EPP's should get tax incentives through the widely accepted EET model. EFR also made recommendations for the possibility to cover additional risks such as disability and for clear and consistent information to the participants.

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