Capital Markets Union/ Savings and Investments Union

Capital Markets Union (CMU)/ Savings and Investments Union (SIU)

On 24 September 2020, the European Commission adopted a new Capital Markets Union (CMU) action plan, with the core objective of increasing long-term investments in the real European economy. 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. Political and regulatory risks are also a key source of uncertainty for investors and can undermine pension funds’ willingness to invest.

Ahead of and following the June 2024 European elections, many reports have pointed out the importance of completing the CMU project. Key contributions include the reports by Mario Draghi, and Enrico Letta, both former Prime Ministers of Italy.

Enrico Letta’s report “Much more than a Market” was presented at the 17-18 April 2024 European Council summit. In his report, he calls for the creation of a Savings and Investments Union (SIU) to build on the incomplete CMU project. His report also proposes creating an auto-enrolment EU Long-Term Savings Product by 2025 within the SIU.

Draghi’s report ‘’EU competitiveness: looking ahead’’ was published on 8 September 2024. He stresses that EU capital markets also suffer from a low flow of savings, mainly due to undeveloped second and third-pillar pension systems in most Member States. 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.

These reports are expected to form the basis for the 2024–2029 European Commission agenda and address key concerns, including the EU’s declining competitiveness compared to global powers like China and the United States.

The term Savings and Investments Union has now been widely adopted by the European Commission. In particular, President Ursula von der Leyen has appointed Maria Luís Albuquerque Commissioner for Financial Services and the Savings and Investments Union. In her mission letter, President von der Leyen explicitly tasks Commissioner Albuquerque with the mandate to “develop the Savings and Investments Union” as part of her portfolio.

PensionsEurope actively engages in shaping the future of the CMU and SIU. We met with Enrico Letta and send our contribution to his report. Similarly, we also shared input to Mario Draghi’s report. We are now closely following the developments at EU level and will work on any initiatives relevant to pension funds within the SIU.

Securitisation

Relaunching securitisation 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 securitisation may further provide long-term investors, such as pension funds, with a broader pool of genuinely low-risk assets from a credit perspective.