The European Commission has vowed to review “discriminatory” EU member state tax policies as it detailed plans to boost cross-border investment by the pensions sector.

Publishing its Action Plan on the Capital Markets Union (CMU), the Commission released proposals aimed at growing the European securitisation market, which it estimated could boost investment in Europe by €100bn if it once again reached pre-crisis levels.

It also launched a consultation on covered bonds and accepted proposals by the European Insurance and Occupational Pensions Authority that certain infrastructure investments should qualify as a standalone asset class under Solvency II.

Jonathan Hill, commissioner for financial stability, said the CMU was about “creating the right conditions for more funding to flow from Europe’s savers to Europe’s businesses”.

Hill added that the Commission was looking to identify “factors negatively affecting long-term investment and growth”, with the cross-border taxation of pension investments identified as one area in need of reform.

The Commission said it would promote best practice and develop a code of conduct on withholding taxes across the single market and examine, in 2017, any discriminatory taxes hampering cross-border investment by pension funds.

It warned member states it would launch infringement procedures against countries in breach of EU law.

Reaction from the European pensions and asset management industry groups was guarded but positive.

PensionsEurope chair Joanne Segars said the organisation welcomed the comprehensive approach on financing future economic growth but added that the Action Plan had the “potential” to remove cross-border investment barriers.

Matti Leppälä, director general of the organisation, added: “The publication of the Action Plan means the EU can now take concrete steps to overcome the remaining obstacles and improve investment opportunities for pension funds and other institutional investors.

“PensionsEurope stands ready to contribute.”

The European Fund and Asset Management Association welcomed the idea of a pan-European personal pension to bring about a “truly” single market.  

“The current market fragmentation,” it added, “makes economies of scale impossible to achieve and limits the choice of pension products and pension providers.”

The Association of Chartered Certified Accountants also greeted the plan favourably but warned against hasty design or poor implementation.

Representing the retail investor sector, including pension interests, Better Finance also qualified its welcome with the caution that the initiative must “involve and attract EU citizens as individual investors”.

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