Press Release
6 May 2014
Pension funds will suffer from the FTT, even with an exemption
The draft legislative proposal on the enhanced cooperation procedure for a Financial Transaction Tax
(FTT) which is currently being debated by the 11 participating Member States would tax the financial
transactions of all the different types of financial institutions, regardless of their social function, role in
the financial crisis and nature of their investments (i.e. speculative vs long-term).
The Chief Executive of PensionsEurope, Matti Leppälä, commented:
“PensionsEurope is deeply concerned about the rationale behind the FTT proposal. If the proposal will be
applied in its current form, pension funds will be badly affected by this tax. The consequent increase of
costs will ultimately be borne by the pension beneficiaries in terms of higher contributions or reduced
benefits. There is no cause to ask European pension beneficiaries to pay for the crisis. They did not cause
it, but rather they have suffered (a lot) from it”.
“Pension funds are currently not exempted from the scope of the FTT proposal. We believe that this is
extremely unfair since they will be negatively affected even in the case of finally being granted an
exemption. Indeed, the transactions made by pension funds in the financial markets would be directly
taxed by the FTT. In addition, we expect that the other sell-side and intermediate financial institutions
taxed by the FTT will eventually pass their share of the tax to their customers such as pension funds.
Pension funds, as institutional investors, are customers (buy side) in the financial markets and we
therefore fear that, as it is the case with other taxes, the final customer will end up paying for it.
PensionsEurope invites the 11 participating Member States to dismiss the proposal. However, should the
tax be introduced, then pension funds and their asset should be exempted from its application in order to
reduce the burden for European pensioners”.
“Moreover, one should also always keep in mind the fundamental differences between pension funds
and other financial institutions. Pension funds are not speculative investors. Pension funds are long-term
investors which focus their investments in the long term in order to manage their long-standing
liabilities. Pension funds did not require any support in terms of funding from public finances during the
crisis. They actually contributed to water down the crisis by keeping their long-term liabilities in the
financial markets”.
“Pension funds fulfill an important social function: they are generally not-for-profit institutions which
contribute to ensure that European citizens have an adequate retirement income. In times when public
(pay-as-you-go) pension systems are increasingly confronted with strong economic and demographic
constrains, private funded pensions should be promoted and not the opposite”.
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About PensionsEurope
PensionsEurope represents national associations of pension funds and similar institutions for
workplace pensions. Some members operate purely individual pension schemes.
PensionsEurope has 23 member associations in EU Member States and other European
countries with significant – in size and relevance – workplace pension systems1.
PensionsEurope has established a Central & Eastern European Countries Forum (CEEC Forum)
to discuss issues common to pension systems in that region.
PensionsEurope member organisations cover the workplace pensions of about 80 million
European citizens. Through its Member Associations PensionsEurope represents approximately
€ 3.5 trillion of assets managed for future pension payments.
PensionsEurope Members are large institutional investors representing the buy-side on the
financial markets.
Contact:
Mr. Matti LEPPÄLÄ, Secretary General/CEO
Koningsstraat 97 rue Royale – 1000 Brussels
Belgium
Tel: +32 (0)2 289 14 14 / Fax: +32 2 289 14 15
[email protected]
www.pensionseurope.eu
1
EU Member States: Austria, Belgium, Croatia, Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg,
Netherlands, Portugal, Romania, Spain, Sweden, UK. Non-EU Member States: Guernsey, Iceland,
Norway, Switzerland.