Rethinking retirement in Europe

00:00:03: Hello and welcome to a new episode in this Alfie annual report podcast series.

00:00:07: In twenty-twenty five, pensions moved firmly up the European policy agenda driven by the Savings & Investment Union And growing recognition that public pensions alone may not be enough for future.

00:00:20: Against that backdrop Alfie has been contributing on how to strengthen supplementary pensions improve retirement outcomes make long term savings work better citizens across Europe.

00:00:32: Today we will look at where Alfie focused its efforts with David Zuckerfeld, who is coordinating the pensions committee.

00:00:40: Hello Davy!

00:00:41: Hi Mika!

00:00:42: David, twenty-twenty five was an important year for pension reform in Europe.

00:00:47: What has changed at European level and why did pensions become such an important part of their Savings & Investment Union agenda?

00:00:56: One of the recommendations under this savings investment union was to strengthen pension systems using targeted tax incentives, promoting second pillar occupation but also personal pensions.

00:01:10: Projections that European institutions have done across European member states.

00:01:17: the public average pension may drop to as low as thirty five point five percent of the gross wages in twenty seventy.

00:01:28: so what does it mean?

00:01:29: if you earn X you're only going to get thirty-five percent of X when then eventually retire.

00:01:36: So this is why personal savings are essential and it's one the top priorities for the current European Commission We have responded to the Savings & Investment Union, made bold statements also on pensions, personal pensions and occupational pension.

00:01:55: so we talk about second or third pillar.

00:01:57: And at same time Alfie's Management Commission study with the University of McGill called Europe's productive capital gap.

00:02:06: I believe it is really worth a read, The Alfie-McGill study shows that Europe is falling behind in mobilizing household and pension savings into investments via pension products compared to reformed economies like Australia Canada and Sweden.

00:02:26: Thank you for this overview David.

00:02:28: and when the European Commission launched its consultations on supplementary pensions last year What were the main priorities?

00:02:35: The Alfie pensions committee chose to focus on

00:02:39: we believe that is good That we focused on the reform of the existing legislation Because pan-European pension products on your creation, but also in a personal pension side have not really worked.

00:02:51: But when we talk about projections of average public pensions dropping to thirty-five point five percent.

00:02:59: We as an association reiterated that we need to know what first pillar pensions or what public pension people are going to receive and this needs to be done cross border.

00:03:12: there's hardly any transparency for you me on can expect from state pensions.

00:03:18: I've worked in different member states and hearing that it might only be thirty-five point five percent on aggregate is an eye opener, so we have asked for better information to chose a realistic picture of what retirement contribution citizens can reasonably expect.

00:03:33: On occupational pensions We provided for catalogs suggestions To make pan European frameworks more efficient In the PEP.

00:03:42: we commented on structural issues on aspects like the removal of the fee cap, the removal mandatory advice for this thing called basic PEP meaning you don't need to opt into any product.

00:04:00: There is one that you automatically by default can invest in too as it will improve accessibility and most importantly lower distribution costs.

00:04:11: The pension package published in late twenty-twenty five appears then to reflect many of the market's recommendations.

00:04:19: What outcomes do you think matter most now, especially on PEP?

00:04:23: They've onboarded most of our suggestions for which we are extremely grateful and also private assets found their way into the PEP because we believe that they can provide important diversification And once combined with other public assets.

00:04:44: We have also suggested combining occupational and personal PEPs in a single pension product where you have less administrative burden.

00:04:53: And, um... You could think about how Member States introduce auto-enrollment into such a PEP?

00:05:00: It's contentious!

00:05:01: Not every member state agrees but whilst it might not work for some Member States we believe that it could in others.

00:05:09: the idea is to have these products available especially for those cross-border workers.

00:05:16: PEPs are only going to be successful if they're practical, If flexible enough To support innovation For the providers of these products but also for me as a saver and this must Be The guiding principle going forward.

00:05:32: Thank you very much David for this conversation.

00:05:35: For Alfi, the SIU remains an important area of engagement as we support more effective pension solutions across Europe.

00:05:42: We invite to read the annual report in full on alfi.lu.