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There is much more in the Commission’s White Paper. It addresses concerns in all EU countries, namely the increasing ageing population and the failure to create social systems capable of dealing with the growing financial burdens of retirement.
The financial crisis, and then the eurozone crisis, have brought these challenges into ever sharper focus. Faced with a diet of further austerity measures, generous public pension arrangements will increasingly become a thing of the past. Countries such as Greece and Italy will by no means be alone in facing up to this reality – they just happened to get there first.
The White Paper contains sensible calls for reform, such as raising or abolishing mandatory state retirement ages, improving labour market participation for women and older workers, and encouraging an end to retirement, which is endemic in some EU countries. But the White Paper is also respectful of Member States’ reserved powers in the areas of taxation and state pensions. It is difficult to see how the White Paper’s promise to “closely monitor” Member States’ pension policies will bring about major reforms in politically explosive areas. Nor can one see whether the proposed recommendations in restricting early retirement will carry any real teeth.
A more positive development, from the perspective of the asset management and long-term savings industry, is the Commission’s talk of “enhancing the opportunities for safe complementary retirement savings”.
But what is surprising is the relative lack of developed proposals covering the retail investment market and private personal pensions. Some aspects of this debate will be played out elsewhere – such separate EU rules on the regulation of retail distribution, which the UK has pre-empted with its own Retail Distribution Review. But much in pensions has sunk without trace, such as the need for better financial education. This is critical to overcoming consumer apathy and confusion. More action on this front is vital.
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