A significant increase in the value of assets managed by the retirement savings industry can be expected, she noted outlining some the challenges faced by the euro area economy.
Pension funds will potentially play an important role in the shaping of the financial market, Gertrude Tumpel-Gugerell said. “Over the coming decades, as the ‘first pillar’of old-age provision will increasingly need to be complemented by a strong ‘second pillar’ of occupational pension funds, a significant increase in the value of assets managed by the retirement savings industry can be expected”, she noted.
Hence, the growing importance of pension funds, as illustrated in the strong growth of pension fund assets, is therefore likely to enhance the efficiency, depth and liquidity of the financial markets.
Mrs Tumpel-Gugerell outlined three particular difficult challenges faced by the euro area economy:
Ø the ageing population, where I see an greater need on the side of public authorities and private pension funds to foster conditions that encourage and are conducive to saving, particularly in countries with a strong ageing of the population.
Ø the preservation of the purchasing power of money, where pension funds as long-run investors have a great interest that the ECB fulfils its mandate of price stability.
Ø the shift in the preference for managed savings on behalf of households, where I encourage all actions that improve the corporate governance framework for pension funds and provide more information and transparency to pension fund customers, supporting the long term accountability of private pension funds. At the same time, for such measures to be fruitful, I see a need to enhance the financial education of our fellow citizen.
Full speech
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