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Increasing long term investments in the real European economy is the core policy of the CMU initiative, and this means it is vital that the CMU works for pension funds. Many pension funds currently encounter barriers in the form of a mismatch between their own long-term investment horizons and the short-term focus of much of the regulatory framework. Member States and the EU should ensure that prudential and supervisory frameworks encourage long term investments and that financial market regulation does not unduly lock capital in the pension funds.
The PensionsEurope response reminds EC policy-makers that political and regulatory risks are a key source of uncertainty for investors and can undermine pension funds’ willingness to invest. The European Commission is urged to identify measures to reduce political risks.
Matti Leppälä, PensionsEurope’s Secretary-General and CEO, said: ‘Pension funds already are major investors in the European economy, with trillions of euros invested in European projects and companies. Many pension funds want to increase their long-term investments in Europe but currently face obstacles. I therefore call upon the European Commission and national governments to step up its dialogue with pension funds – large and small –to identify the CMU actions which work for pension funds and can be beneficial for all.’
Mr Leppälä added: ‘Pension funds are natural long-term investors. Under the right conditions, their capital can make a huge contribution to the future growth of the EU real economy. As long-term investors, they can also contribute to financial stability. However, this will only happen if EU policies work well with and for pensions. Pension funds’ role is to provide pensions, they work in the interest of their beneficiaries. Freedom of investment is therefore a central principle.
Full PensionsEurope response to the Capital Markets Union consultation