Local view for "http://purl.org/linkedpolitics/eu/plenary/2003-03-11-Speech-2-282"
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"en.20030311.11.2-282"2
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"Mr President, the vast majority of the Group of the Party of European Socialists will vote for the package of amendments negotiated with the Council and the Commission by Mr Karas. I would like to thank Mr Karas for all his work.
The result of the second reading will probably be acceptable overall. We are going to create a European passport for pension funds. We are dealing with a financial instrument but one that has social objectives. Some improvements are therefore necessary in relation to the Council’s positions. We need to guarantee European citizens decent pensions. Pension funds will have a role to play in this respect, especially if there is also biometric coverage for contributions, or protection against the hazards of life.
To present pension funds as a panacea however would be a deliberate lie. The press is today referring to a message from the
to the Ecofin Council. It presents pension funds as a miracle solution to the problems of financing pensions in Europe in future. According to this association of large employers, it will no longer be possible to finance the first pillar of the pensions system, which involves redistribution, as there is an increasing number of recipients and a decreasing number of contributors. Pension funds that are based on the accumulation of capital, however, will experience exactly the same demographic problems once they reach maturity. In fact, pensions paid in any given year always involve transferring funds from working people to retired people, whether by redistribution or the accumulation of capital.
Since the bursting of the speculative bubble, most pension funds have shown negative yields. In the United States, pension funds provided by large companies are having to face up to a deficit of more than USD 300 billion. In Great Britain, the company pension funds deficit was estimated at between GBP 65 and 130 billion at the end of 2002. There are also significant deficits in Sweden, the Netherlands, Belgium and elsewhere. Even the modest pension funds for Members of the European Parliament have just amended contributions by three points. This type of exercise would also save all redistribution funds. Due to negative financial yields, companies with pension funds no longer have a guaranteed benefit system but a guaranteed contribution system. In a guaranteed benefit system, contributors save money which they will receive in their retirement. In a guaranteed contribution system, people know how much they are contributing, but receive no guarantee of the result of fund managers’ investment policy. It also goes without saying that fund managers always take their cut of the funds, however the fund is doing.
This explains why the financial sector welcomes the directive so warmly. Once again, the Group of the Party of European Socialists are not opposing the second and third pillar pension funds. We do, however, think that we need to act very prudently and that very strict prudential requirements are necessary. Mr President, pensions based on the accumulation of capital should not undermine national pension systems based on solidarity across the generations."@en1
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"European Financial Services Round Table"1
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