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EU capital markets union receives strong backing from pensions industry

Initiative requires policies to 'be looked at through the lens of pension funds'

14 May 2015

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The National Association of Pension Funds (NAPF) has given its full backing to the European Commission (EC) initiative of integrating capital markets across the union.

The initiative seeks to create a 'single market for capital' which would strengthen Europe's investment prowess, by relieving some of the pressure that is currently shouldered almost exclusively by banks.

The NAPF views this as a positive move as it would increase stability in the funds market, and increase confidence in making long-term investments.

James Walsh, policy lead for EU and International at the NAPF, commented: 'The NAPF is fully supportive of the EC's vision of a capital markets union [CMU] and believes pension funds and their members, have much to gain from a CMU that makes it easier to invest for the long-term and across national borders.'

He added: 'If the CMU project is to succeed, it is vital that the investment opportunities provided by governments or the EC offer the kind of risks and returns pension funds need to meet their liabilities to pay pensions. Policies must be looked at through the lens of pension funds.'

A capital markets union cannot be delivered by a single step, but would require a series of measures which would attempt to link investors and savers with growth investment.

Along with banks, fund managers and insurance companies, pension funds are the EU's key institutional investors.

Measures taken to remove barriers between these industries across the 28 EU member states would have a positive impact on growth, as investors would be able to access investment opportunities more easily.

Mike Weston, chief executive of the Pensions Infrastructure Platform (PiP), stressed that for the initiative to entice pension funds, there must be a 'a clear pipeline of future infrastructure investment opportunities.

'Pension funds are looking for long-term index-linked returns which are most easily secured in a stable investment environment,' Weston said.

"Policy makers at both a national and EU level should look to ensure a stable regulatory and fiscal framework to encourage infrastructure investment.'

He continued: 'This would include providing a clear pipeline of future infrastructure investment opportunities, to give pension funds the confidence to build due diligence resources and to ensure the necessary funds are available when investment is sought.'

 

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