The National Association of Pension Funds (NAPF) in the UK has backed a green paper from the European Commission which recognises the role of pension funds in resolving long-term financing problems.
The European Commission released a green paper that assessed how to improve and diversify financial intermediation for long-term investment in Europe.
The paper questioned whether Europe's historic dependence on banks to finance long-term investment should be abandoned in favour of a diversified system, with higher shares of direct capital market financing by way of bonds and greater involvement of institutional investors and other alternatives.
NAPF said the paper was important as it recognised the role of pension funds as long-term investors.
"We are pleased that European legislators are exploring how pension funds can invest more in infrastructure, including addressing regulatory barriers," NAPF chief executive Joanne Seagrs said.
She said NAPF also welcomed moves to improve relationships between asset owners and asset managers and to implement incentives to promote long-term shareholder engagement.
"The Commission is starting to see that some of its other legislative proposals risk undermining saving and investment," she said.
"We are particularly encouraged by the explicit recognition that the new EU Pensions Directive should not discourage sustainable long-term financing — this gives us hope that Solvency-II type rules for pensions will not be part of the Commission's plans."
Internal Market and Services commissioner Michel Barnier said large-scale, long-term investments needs were just part of the European economy's challenges, but they were essential as a basis for innovation, competitiveness and a platform for sustainable job growth.
"Ensuring our economy and our financial sector — including banks and institutional investors such as insurers and pension funds — are capable of funding long-term investments is an important but complex task. We need to identify what barriers exist to long-term financing and what more can be done to overcome them," Barnier said.
