The Ceps report, called Saving for Retirement and Investing for Growth, said Europe is facing a double challenge: a significant need for long-term investments and a growing pension gap.
The report promotes creation of a portable pan-European savings product at a time when low interest rates and revised prudential standards strain the ability of life insurers and pension funds to offer guaranteed returns.
Households are direct owners or indirect beneficiaries of 60% of financial assets in Europe. And they face a growing need to save more, and more efficiently, for retirement and other future consumption needs, the report said.
To achieve this, long-term savings should be mobilised through investments devised to maximise returns over the long term, by removing market and regulatory barriers.
The authors pointed out that long-term investing needs full illiquidity for end investors, eliminating the possibility of early redemptions.
Retail investors should have better access to long-term investments, including for retirement planning. Retail investors should be provided with easily accessible, high-quality and cost-efficient long-term savings and investments. However, while such investments exist in some member states, they are lacking or sub-standard in others.
Standardisation of investments would help retail access by raising visibility, mitigating complexity and the burden of choice, and focusing competition on quality and costs. Such regulated investments could be sold on an execution-only basis.
However, the authors highlighted that any attempts at reform should be mindful that financial exclusion in the markets for long-term savings and investments is widespread and can only be partially explained by disposable income.
Easily accessible investment solutions are needed, including for those that are most vulnerable.
The report was sponsored by Carmignac Gestion, the Paris-based asset manager that supports research into long-term and retirement saving, a topic that has been championed by the European Fund and Asset Management Association (Efama).
In September, Efama released a report that proposed a European personal pension product which could be distributed cross-border. It described it as a “blueprint for a European brand of personal pension products”.
The report outlined plans for an Officially Certified European Retirement Product (Ocerp). Peter De Proft, director general of Efama, said the proposed high standards of consumer protection, governance and distribution would associate the Ocerp with a high-quality EU label.
The Ceps report, is the result of a year of independent research, carried out by the European think-tank Ceps-ECMI, including a series of meetings with experts and regulators to formulate practical, actionable recommendations aimed at fostering economic growth and tackling the pensions gap in Europe.
Didier Saint-Georges, member of the investment committee of Carmignac Gestion, said the Ceps-ECMI report revealed a need to encourage asset managers to deliver more simple and transparent products that could be easily accessed anywhere to a large number of investors across Europe through a system of open architecture.