EDHEC-Risk Institute has released a comprehensive new study in response to the European Commission White Paper entitled “An Agenda for Adequate, Safe and Sustainable Pensions,” published on 16th February, which proposed a series of measures related to information and monitoring, European harmonisation and portability, and pension design.
In a letter addressed to László Andor, European Commissioner for Employment, Social Affairs and Inclusion, EDHEC-Risk Institute considers that the European Commission White Paper constitutes a first step but that the Commission should go further in terms of harmonisation and better take into account the specifics of the financial management of pension funds.
As such, EDHEC-Risk has highlighted three key messages from its study:
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The current pension debate should be used by the Commission to foster increased coordination in pensions reform. When discussing the sustainability of public finance, one medium-term objective could be to recognise unfunded implicit pension commitments.
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The prudential framework for pensions is bound to have far-reaching consequences, and it needs to respect the particularities of pension providers, which are not those of insurers.
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New regulation should encourage the generalisation of asset-liability management practices, both for pension funds and individual retirement products, using the best available knowledge and techniques and evaluating micro as well as macroeconomic impacts. A move towards hybrid pensions could, with this objective in mind, provide a more adequate conceptual framework for European countries to converge towards.
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