Insurance Europe welcomes the Commission’s aims in its White Paper on Pensions to develop complementary private retirement savings. Indeed, individuals should have the opportunity to build supplementary entitlements through supplementary retirement savings such as third-pillar pensions.
Insurance Europe strongly believes that all EU Member States would benefit from having multi-pillar pension systems. These have the advantage of diversifying risks since the factors that affect labour variables — and hence the first pillar — are not perfectly correlated with factors that affect financial variables, which determine the performance of second- and third-pillar retirement systems. For example, funded pension schemes can mitigate the risks of a lower dependency ratio, while unfunded schemes can mitigate the risks of a low interest rate environment but no system can respond to every challenge alone.