EUROPE – Pension fund representatives across Europe have warmly welcomed the publication of the Green Paper on Long-Term Investing released today by the European Commission, but argued that the proposal should not detract from getting existing regulation right for long-term investors.

In the UK, Joanne Segars, chief executive at the National Association of Pension Funds (NAPF), said the association was pleased European legislators were exploring how pension funds could invest more in infrastructure, including addressing regulatory barriers.

She added that the NAPF also welcomed the attention on improving relationships between asset owners and asset managers, and developing incentives to promote greater long-term shareholder engagement.

"The Commission is starting to see that some of its other legislative proposals risk undermining saving and investment," she said.

"We are particularly encouraged by the explicit recognition that the new EU pensions directive should not discourage sustainable long-term financing."

Segars went on to say that the position taken by Brussels in the paper gave the NAPF hope that Solvency-II type rules for pensions would not be part of the Commission's plan.

The European Private Equity & Venture Capital Association (EVCA) echoed those thoughts and said it would be playing a full part in the "vital" debate the Green Paper had begun.

However, it also stressed that further work was needed, since "much in the way of current regulation" can discourage investors from allocating capital to long-term ventures.

According to the association, the use of current accounting standards to measure risk in long-term asset classes can also be inappropriate, while artificial volatility is created in asset classes, such as private equity, that are designed to be held by investors until maturity.

EVCA secretary-general Dörte Höppner also welcomed the specific attention given to venture capital in the Green Paper, pointing out that 40% of funding for the industry now comes from the public sector.

He added: "It is critical for the future of the European economy that long-term investors such as pension funds and insurance companies can also invest in the Europe's high-growth, innovative businesses."

Steve Kyle, secretary general of the European Pensions and Property Asset Release Group (EPPARG), urged the Commission to take a much more "innovative" and "forward-looking" approach in considering alternative solutions.

"An issue we all face in Europe generally is that of an ageing population combined with an increasing strain on public funds," he said.

"A large percentage of households have invested in their homes and consider these as their pensions, and home equity release provides a way to unlock these funds to help people access their money and to provide a boost to their local economies."

On the macroeconomic level, Kyle added, the availability of long-term assets could be used to match longevity risks and improve risk management, thus providing a means to reduce the inter-generational burden.

"In the context of Omnibus II and the impact assessment on the Long-Term Guarantees Package, we would strongly encourage the European Commission and EIOPA [the European Insurance and Occupational Pensions Authority] to recognise that equity release is a safe and dependable asset that is appropriate for matching long-term guarantees."

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