ECB discusses ageing

In its Occasional Paper 51 - Macroeconomic implications of demographic developments in the Euro area, the European Central Bank looks at the impact of ageing on long term growth rates, labour market policies, financial markets and public finance. The thrust of measures proposed is not surprising:

to increase labour participation by closing a gender gap, raising average hours worked and raising the effective retirement age,

to prepare for a more important role of financial intermediation in retirement provision, taking into account an expected further decline in the real equilibrium interest rate,

to take measures against public expenditures rising above 3% of GDP in most countries in the wake of increased pensions and healthcare costs, especially by increasing the importance of (partially) funded retirement systems,

to monitor the impact of ageing on monetary policy via the aggregate savings rate and real interest rates.

Disquietingly, the ECB does not fully discount the theory that ageing will lead to a decline in asset prices due to increased unsaving of retirees - it only provides several technical caveats. Food for thought indeed!

Liechtenstein joins the fray [FL]

On 23 August, the Liechtenstein government has decided to join the competition to become the most favourable location for pan-European pension funds by adopting a bill to transpose the Pensions Directive into national law. The report 78/2006 should become available here shortly. It is expected that the bill will become law on 1 January 2007, together with the attached regulation which is in the final stages of being drafted.

Demographic leporello [CH]

Swiss think-tank Avenir Suisse has published a comprehensive leporello (a.k.a. leaflet) about the demographic challenges in Switzerland and Europe. It is also available in French.

Netherlands as pensions location? [NL]

According to a story in IPE, the three main Dutch pensions associations have called on political parties to position the Netherlands as the country of choice for European pension funds. Here is the position paper in Dutch.

This statement is important for two reasons. 1) In the Dutch self-perception, the regulatory framework is insufficient at this point to qualify as a country of choice, as opposed to Ireland, Luxemburg - and probably Liechtenstein, we might add. 2) The most important players in the most important continental pensions market recognise the importance of that status, and, implicitely, of the market.

More sustainable Austrian pensions [AU]

Today, NZZ has an article (not available online) referring to an assessment of the recent triad of pension reforms in Austria, published by the Austrian National Bank. (The article is likely to appear in English here soon, too.)

In essence, the authors conclude that the reforms have improved fiscal sustainability in Austria. The most important factors to that end were - unsurprisingly - higher average pension age and lowered pensions.