European Commission president Ursula von der Leyen has put forward her picks for the members of her cabinet for the next political term, saying that they would all be committed to competitiveness.
Competitiveness was a key focus of a highly anticipated report published by Mario Draghi, the former chief of the European Central Bank, last week.
Commissioned by von der Leyen, the 400-page report came with 172 policy proposals and recommendations, including that saving via second-pillar pension schemes ought to be reinforced.
As concerns the new Commission, funded pensions are set to be the remit of Maria Luís Albuquerque, a former Portuguese minister of finance put forward by von der Leyen as commissioner for financial services and the ‘Savings and Investments Union’. Her job description also includes scaling up sustainable finance.
Valdis Dombrovskis was the former commissioner in charge of sustainable finance, and he has been moved to a new ‘Simplification’ portfolio, which critics see as a corporate-driven deregulation agenda.
Didier Millerot and Tilman Lueder are due to become the next heads of sustainable finance and insurance and pensions, respectively, at the Commission, as previously reported by IPE.
As concerns Albuquerque’s pensions responsibilities, these are to include helping design simple and low-cost saving and investment products at European Union level – for which the feasibility of tax incentives should be assessed – and “work[ing] on the potential of private and occupational pensions to help EU citizens with their retirement and channel their savings into the economy”.
Mario Draghi’s report
European pension fund associations back the second pillar ideas put forward by Draghi.
“The next EU commission needs to clarify what it will aim to do, introducing second pillar occupational pension products, already offered in great number, or third pillar products,” said Matti Leppälä, chief executive officer of PensionsEurope, underlying the challenges to launch new products shown by an unsuccessful Pan-European Pension Product (PEPP).
A spokesperson at the Dutch Federation of Pension Funds (Pensioenfederatie) said the next European Commission should support member states where possible to expand funded pensions, as second- and third-pillar pension systems remain underdeveloped in some European countries.
At Insurance & Pension Denmark (IPD), deputy director Tom Vile Jensen said the Draghi report was right to point out high levels of administrative burdens and red tape as a barrier to further investments in Europe, as it was partly due to this that Danish pension funds increasingly invested in US companies at the cost of European companies.
Solvency II
IPD also welcomes possible changes to capital requirements under Solvency II to potentially boost investments.
“One fundamental challenge to invest in start-ups is that they often lack the scale necessary to really attract the attention of pension funds. That being said, we look positively at new initiatives increasing the attractiveness of investing in start-ups. This could also lead to improved possibilities for investing in the broader business community in Europe”, Vile Jensen added.
Start-up investments “are not always easy” given relatively small ticket sizes and high costs, but Pensioenfederatie hopes that Draghi’s innovation agenda will create more opportunities, while legal requirements are not a barrier.
The former head of the ECB has also suggested increasing the budget of the European Investment Fund (EIF) and expanding the mandate of the European Investment Bank (EIB) for co-investments in ventures requiring larger volumes of capital.
“Better public-private partnerships at European level can persuade pension funds to invest more in innovative scale-ups or infrastructure projects. In the past, we have experienced competition from the EIB for investments that could have been done by the market”, Pensioenfederatie said.
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