Companies are slow to set up cross-border retirement plans, but individual savings programs are not enough to ensure a strong workplace defined contribution system in Europe, attendees at the PensionsEurope conference in Brussels heard Thursday.
The rate at which corporations establish cross-border plans has grown about 8% but "nevertheless some growth is still there," said Francois Barker, partner at law firm Eversheds Sutherland.
Speaking on the same panel, Christian Lemaire, head of retirement solutions at Amundi, said one reason for employers' sluggish appetite is "regulators underestimated that to set up cross-border (plans) ... corporations have got to have scale."
"Interestingly, we were concerned about setting up national (units) in the largest EU countries, but running those sections is not the most difficult," Mr. Lemaire added. "Sponsors (often) don't know national legislation of smaller countries" where they have subsidiaries, or the language to engage with participants, and that creates complexities, he said.
In the face of the ongoing changes in the global economy, individual savings vehicles such as the Pan-European Personal Pension proposed by the European Commission are seen by many as a substitute that meets the needs of different groups of workers: mobile, flexible and temporary workers across the European Union.
Other speakers at the conference agreed that adequacy of retirement plan contributions made by employers is diminishing due to the growth of the flexible economy. They warned wages in Europe have stagnated in recent years, while the number of self-employed people has increased. During a separate presentation, Ana Carla Pereira, head of unit for the modernization of social protection systems at the European Commission, said that 40% of all EU workers are now self-employed or work on fixed or part-time contracts.
PEPP or similar arrangements should be a supplementary option only, speakers said. Individualization of retirement arrangements means workers lose the chance to bargain at a collective level, said Sophia in 't Veld, a member of the European Parliament.
Zoe Alexander, director of strategy at the £2.7 billion ($3.6 billion) National Employment Savings Trust, London, said one solution to making sure the self-employed are included in the retirement system would be to opt them in through a national tax system.