Session 4: Pensions (Part I)
The session, moderated by Dr. Andrej Stuchlik from the Bertelsmann Foundation, started with the opening remarks by the delegate of Commissioner for Employment, Social Affairs and Inclusion Lazlo Andor, Mr. Fritz von Nordheim, Deputy Head of Unit of Social Protection and Activation Systems of the European Commission.
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Mr. Von Nordheim introduced the European Commission’s work on the goal of cost-effective and save complementary retirement savings, and recalled that in 2012 the Commission published a White Paper with the aim to support progress towards adequate safe and sustainable pensions in an ageing Europe.
[su_pullquote align=”right”]Fritz von Nordheim claimed two avenues for safe and sustainable pensions: re-balancing time in work and time in retirement and enhancing complementary retirement savings[/su_pullquote]To do this, he claimed two avenues: re-balancing time in work and time in retirement and enhancing complementary retirement savings. Mr Von Nordheim added that the main implementation measures were: a) Pension recommendations in the context of European economic governance; b) the Portability Directive (on standards for the acquisition and preservation of occupational pension rights of mobile workers); c) the review of pension funds (IORP) directive focused on governance and transparency; d) promoting transparency and better pensions information; and e) promoting better occupational and individual pensions.
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Despite the abovementioned need for European regulation, Mr. Von Nordheim also admitted that it was also worth discussing to what extent is European regulation necessary, since there are a lot of good examples in national regulations.
From the point of view of Sweden, Ms. Elin Berglöf, Actuary at the Swedish Pensions System, introduced the three pillars of the Swedish pensions system: a) the first pillar provided by the government, and divided into two parts: the income pension and the premium pension; b) the second pillar, provided by the employer, as the occupational pension plans; and c) the third pillar, as any kind of private individual pensions.
[su_pullquote]Elin Berglöf claimed that the problem was not that people lived longer, but that they retired too soon[/su_pullquote]Considering the changes in the latter decades (especially in terms of demography), the system went into revision and Ms. Berglöf stated that this took into account the following considerations: sustainability, transparency, based on life-time earnings, and with no age limit. In this sense, Ms. Berglöf claimed that the problem was not that people lived longer, but that they retired too soon.
The session continued with Mr. Arnaud Breuil, Director of the Institute of International Social Cooperation in France, recalled that before the year 2000, social protection and retirement were not European subjects. However, they became ones when the retirement system started to create some problems in terms of deficit and debt.
[su_pullquote align=”right”]The French government does not give answers to some crucial issues such as the possibility to continue to work when you retire, according to Arnaud Breil.[/su_pullquote]Mr. Breuil admits that in France there have been seven reforms of the pension systems since 1990. Also, he alerts that the French government does not give answers to some crucial issues such as the possibility to continue to work when you retire. In addition, Mr. Breuil stressed that the European Commission is asking France to make real reforms, but he believed that there was no possibility to see a real change in France in the short term, since the reaction has been very severe, thus, as Mr. Stuchlik underlined, the impression arises that Brussels –to some extent- would interfere with very specific national wealth arrangements.
The session continued with the Netherlands case study, carried out by Dr. Hans van Meerten, Barrister and expert on pension law at Clifford Chance, who started by reminding that in Europe we had the Banking Union, and the directive for insurance companies –among others, but there was no close harmonisation on pensions yet. Dr. Van Meerten added that in 2003 was the date of the establishment of the IORP Directive, thus being the first step in European harmonisation. It was implemented in national legislations in 2005, but since then. Its impact has been very low. Therefore, he admits that there is no real cross-border activity yet.
[su_pullquote]Hans van Meerten admits that there are already some foundations, such as the EOIPA, who is trying to harmonise individual pension products[/su_pullquote]Dr. Van Meerten confirms that Dutch pension schemes plan to move to Belgium, since it is a question of the interest of the participant, which he sees as an “EU pensions pooling”. Despite criticising the low advancement towards a Pensions Union, Dr. Van Meerten admits that there are already some foundations, such as the EOIPA, who is trying to harmonise individual pension products. Dr. van Meerten advocated for a harmonisation of the second pillar arrangements on pension funds because he agrees that it is an internal market issue, and for this reason, it should be a European issue.
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The last panellist was José Antonio Iglesias, Deputy Managing Director of Clients and Bids at VidaCaixa, in Spain. He started by admitting that demography was also a big challenge in Spain and reminded that Spaniards were not traditionally worried about their savings, but this changed in the last years. [su_pullquote align=”right”]Spaniards were not traditionally worried about their savings, but this changed in the last years, said José Antonio Iglesias[/su_pullquote]Therefore, he insisted on VidaCaixa’s proposal to overcome this critical situation: more information, more guidance, more anticipation and more adapted solutions.
Finally, Mr. Iglesias stated that it was essential to develop the end-user culture of savings among citizens; that VidaCaixa’s duty was to act and provide solutions; and that they built on the relationship of trust and proximity they have with their customers. The session ended with several interesting questions from the audience, which set the base for the session that followed.