Capital Markets Union

Capital Markets Union (CMU)

On 24 September 2020, the European Commission adopted a new Capital Markets Union (CMU) action plan. Increasing long-term investments in the real European economy is the core policy of the CMU, and this means it is vital that the CMU works for pension funds.

Many pension funds currently encounter barriers in the form of a mismatch between their own long-term investment horizons and the short-term focus of much of the regulatory framework.

Furthermore, political and regulatory risks are a key source of uncertainty for investors and can undermine pension funds’ willingness to invest.

The EC is now reflecting on the CMU’s progress and remaining obstacles while assessing the different workstreams working on the priorities of the next mandate.

Against that background, PensionsEurope met and sent a contribution to Enrico Letta, former prime minister of Italy and current president of the Jacques Delors Institute as he drafted a report “Much more than a Market”  which was delivered for the 17-18 April 2024 European Council summit. His report calls for creating an auto-enrolment EU Long-Term Savings Product by 2025 within a Savings and Investments Union.  

Our input addresses the role of our sector in the CMU agenda, our specificities and outlines different possibilities to deepen the single market.

Furthermore, we also send input to Mario Draghi’s team. In his report, he highlights that EU capital markets also suffer from a low flow of savings, mainly due to undeveloped second and third-pillar pension systems in most MSs. The lack of development of funded pensions is described as a ‘’missed opportunity’’ for Europe because pension savings represent consumption used for long-term investments.  

Securitisation

Relaunching securitization has been recommended in the report from Christian Noyer, the report from Enrico Letta, and the report from Mario Draghi to strengthen the lending capacity of European banks, creating deeper capital markets.

PensionsEurope answered the recent Commission consultation that ended in early December 2024. In general, we support any beneficial revision of existing regulations to boost the EU’s financial market competitiveness. We believe that securitization may further provide long-term investors, such as pension funds, with a broader pool of genuinely low-risk assets from a credit perspective.