Governments are using pensions to manipulate policies to the detriment of members warns pan-European pension body PensionsEurope.
The body, which represents 23 national pension bodies across the EU, has expressed concern at the long list of initiatives taken by governments that shows they see pensions, members and pension institutions as source of capital that may be used to adjust fiscal imbalances and meet fiscal consolidation objectives.
The report highlighted reductions in tax advantages for pensions, such as the reduced lifetime and annual allowance in the UK, as examples of politicians using pensions for short-term policy fixes. It also identified a real risk of the transfer second pillar assets into the State, and expressed genuine concerns that such measures could be implemented in Poland.
The survey found evidence of actual or planned policies for the nationalisation or transfer of pension assets from second to first pillar; increases in tax on occupational pension benefits and contributions, temporary taxes and levies and reductions in the amounts that can be saved tax-free.
It also raised concern over pressure being applied by governments to encourage pension funds to invest in certain asset classes or economic sectors. It cited unsuccessful political attempts from right wing parties in Austria to prescribe a certain amount of investment in Austria as a threat to the independence of pension funds and a challenge to the freedom of capital that is a fundamental right within EU treaties.
PensionsEurope CEO Matti Leppälä says: “Effective pensions policies have to be for the long run. If governments tamper with workplace pensions, people will rightly lose trust in them. And if drastic measures, such as nationalisation of pension funds are used, it will take decades to build them up again. People in Europe need good pensions and that will not happen without good workplace pensions”.