02 November 2020

IPE: Insurance group prods FSB for G20 support for private pension systems

The Global Federation of Insurance Associations (GFIA) has seized on the opportunity of the 2021 Italian G20 presidency to call on the Financial Stability Board (FSB) to support the resilience of private capital-backed pension systems.

In a letter to FSB chair Randal Quarles, the federation said such systems not only contributed to the adequacy of pension revenues but had a key role to play in the recovery from the COVID-19 pandemic in both developed and emerging markets.

It is urging the FSB to highlight the importance of private pension systems in its policy suggestions for the G20 summit recommendations.

“We consider that the 2021 Italian G20 presidency provides new momentum to bring into the spotlight the long-term benefits of pre-funded retirement savings,” said GFIA president Recaredo Arias in the letter, published today.

“Targeted suggestions in this regard would enable the Italian G20 presidency to look at the role that long-term capital asset accumulation could play in facilitating the recovery from the COVID-19 pandemic.”

Arias also wrote that the federation was inviting the FSB “to encourage the International Association of Insurance Supervisors, the International Organisation of Pension Supervisors (IOPS) and the OECD to further contribute to the discussions on the risks that COVID-19 poses to funded retirement systems”.

“Such discussions should also cover the contribution of these long-duration assets to economic recovery,” said Arias.

At PensionsEurope, general secretary Matti Leppälä suggested the pension fund association would be quite aligned with GFIA’s asks.

“Support for private pensions at G20 level would be very welcome and the support for the good work of OECD and IOPS and others is also very important,” he told IPE.

“Pension funds have played an important role in building and supporting local capital markets, and this was a concern for example after the financial crisis.

Leppälä added: “Even though there is an EU capital market in fact capital markets remain very local and local institutional investors, such as pension funds, are important for them and these local capital markets are instrumental in supporting growth and employment of local economies, which are necessary also for the recovery from the COVID crisis.”

Earlier this year Leppälä told IPE conference delegates that there would be even more need for funded private pension provision as economies are changed by the coronavirus pandemic.

A G20 leaders’ summit will be held on 21-22 November, shortly before Saudi Arabia’s current presidency ends.

IPE

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