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EFR supports Pensions Directive Back  
The completion of a single market for pensions in Europe would create substantial benefits for consumers across Europe, and for economic growth, a report published by the European Financial Services Round Table (EFR), the pan-European association of financial services groups, has revealed.
However, in what has been a common thread in recent research on the provision of pensions, the report also states that most Europeans remain ‘blissfully unaware’ of the dangers to their future posed by the gap between what they expect to receive in retirement and what state pension systems in Europe currently offer. A report commissioned by the IAPF in June also found that funding of pensions in Ireland is inadequate, and that many employees current levels of funding are not sufficient to provide adequate retirement benefits.
Calling the proposal for a Directive on the provision of pan-European pensions a ‘breakthrough’, the EFR say that final adoption of an agreed Directive and implementation into national law are urgently needed.
Led by Pehr Gyllenhammer, chairman of Aviva (previously CGNU), the EFR was formed in 2001 to provide an industry voice on European policy issues relating to financial services, and its membership is made up of the chairmen and CEOs of Europe’s leading banks and insurers. Pension experts within the members’ companies prepared the report. According to Gyllenhammer, ‘The benefits of an integrated pensions market are clear, and the initiatives that need to be taken to create a more integrated pensions market and encourage greater take-up of private pension schemes are achievable. What is needed is political will and we call on politicians at European and national levels to take the initiative now before Europe’s pension nightmare comes true.’
While the Pensions Directive proposal has been welcomed by the pensions industry, the achievement of a huge barrier remains in the form of taxation. To overcome such barriers, the EFR report recommends that all member states work towards taxation on an EET model, where contributions are Exempt (E); where funds are Exempt (E) during the accumulation stage; and where proceeds of pension funds are Taxed (T) during the consumption stage. The report also calls for no discriminatory tax penalities on investing in or consuming pension savings in other EU member states, as well as a requirement that all new EU member states put in place a taxation system for pensions compatible with an EU-wide system.
The report also recommends that there should be no legal barrier to employees remaining in scheme membership even though they move to a different member state, whilst still employed by the same company, and that employees should be assured that a fund will be properly managed and that sums contributed will be safeguarded. On the matter of transparency, there should be full, frank and easily understood disclosure of the terms and provisions of a pension scheme or plan.
The EFR’s initial focus is to support the completion of the single market in financial services, and earlier this year, the EFR published a report, which was prepared by Professor Paolo Cecchini, on the benefits of a single market for financial services in Europe.
The study evaluated the economic costs of failure to complete the single market in financial services, and the benefits that a single market will create.
The ERF’s members include representatives from ABN Amro, AEGON, Allianz, Assicurazioni Generali, AXA, Barclays, BBVA, BNP Paribas, CGNU, Deutsche Bank, Fortis, ING, Munich Re, Nordea, the Royal Bank of Scotland and UniCredito Italiano.

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