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Pension funds are there — first and foremost — to serve a social purpose. Only in second place should they act as financial institutions, given the huge assets they manage. They can make a major contribution to tackling the challenge of demographic change and underpinning the sustainability of public finances and, more generally, economic performance. In their capacity as major institutional investors, pension funds can help stabilise markets and promote more responsible investment.
Many reforms adopted recently will result in lower statutory pensions. This is inevitable as Member States seek to ensure that public pensions remain affordable while the economic burden of population change increases. This leaves more scope for supplementary pension provision. But we cannot rely on pension funds to fill this gap spontaneously.
We need to create the right conditions for them to develop and provide secure benefits at a reasonable cost. This is primarily the Member States’ responsibility but since we are operating in a single market, this responsibility falls upon the EU as well. While recognising their inherent social function, pension funds also need to be compatible with the fundamental freedoms of the European Union.
In particular, people who move across borders must not lose out on their rights. I am glad therefore that the work on the so-called Portability Directive, on the preservation and acquisition of supplementary pension rights, has been resumed under the Cypriot presidency and will be actively pursued under the current Irish Presidency.