BETTER FINANCE warns of the effects of the health crisis on pension adequacy



BETTER FINANCE has released the eighth edition of its report on the Real Return of Long-Term and Pension Savings.

The report reveals that despite better performances in 2019, poor real long-term returns persist. Too many pension schemes still reveal negative or very low long-term returns once charges and inflation are deducted. In addition, since the end of 2019, these assets have dropped in value, and today’s severe recession generates a slowdown in pension contributions.

In its press release, BETTER FINANCE once again raises the alarm and calls for a reform of pension and capital market policies to mitigate the effects of the health crisis on pension adequacy.

BETTER FINANCE put forward a number of key policy recommendations to ensure decent long-term returns for private pensions. Those recommandations includie:

  1. Harmonise and reinforce rules to effectively curb conflicts of interests in the distribution of long-term and pension savings products.
  2. Restore standardised long-term and relative past performance disclosure for all long-term and retirement savings products.
  3. Grant special treatment through prudential regulations for all long-term & pension liabilities (eliminate the debt bias).
  4. Simplify the “basic PEPP” and allow direct investments into capital markets (plain vanilla stocks, bonds index ETF) for PEPP savers.
  5. Urgently impose harmonised and comprehensive insurance guarantee schemes across the EU since a majority of personal pensions are insurance-based and -regulated.

Access the full report ‘Long-Term and Pension Savings – The Real Return’

A simplified booklet of the Pensions Report with the main findings and recommendations is also available, as well as a table presenting the annual average performances of the pension products covered by the report by country.

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