Politicians across Europe should move to take the politics out of retirement savings, and look instead at the bigger picture of problems with a lack of retirement savings, said Joanne Segars, CEO at the U.K.’s National Association of Pension Funds.
Addressing delegates at the WorldPensionSummit held in The Hague, Netherlands, Ms. Segars said the second version of the European Commission’s Institutions for Occupational Retirement Provision directive, which is yet to be finalized, is “enormously prescriptive … (creating the directive) takes place behind closed doors, a labyrinth of groups far, far away from pension schemes and their members.”
Rather, she said, “we are missing the big issue … the fact that half of Europe’s workers aren’t saving and don’t have access to workplace pensions. That is a huge, potential, looming pensions crisis … a political issue.” She said if she were in the politicians’ position, she would be focused on that issue, “not the micro detail of how pensions operate.”
The trustees of retirement plans are in a far better place to communicate to members than “bureaucrats in Brussels or Frankfurt,” Ms. Segars added.
The directive requires harmonized standards for occupational retirement plans across European Union member states in anticipation that it will promote more freedom of movement of labor across these markets. “I'm not entirely sure that I would believe that.”
There is also a call for a two-page benefits statement to go out to participants, detailing their retirement plans that would be identical across member states. “The commission is trying to specify the content, frequency and channel of every communication a scheme sends to its members. I'm not really sure I see the benefit of that ... Where is the demand for this? Where is the evidence for this?" she said.
Ms. Segars also highlighted a move by Chancellor of the Exchequer George Osborne in March that removed the requirement for defined contribution plan participants in the U.K. to purchase an annuity to fund retirement. She said it was a “revolutionary change ... politics changed everything."
The removal of the requirement means plan participants have the freedom and choice to choose how they access their DC savings. The changes become effective in April.
“A cynical person would suggest that this was a great example of how pensions are used as a political football by governments,” Ms. Segars said, referring to the “electioneering” going on ahead of a general election in May, since the changes will affect a meaningful proportion of participants.