The coronavirus pandemic has dealt a blow to pension systems across Europe, heaping pressure on policymakers to introduce reforms to avoid a decades-long retirement crisis, according to an influential consumer group.
Big increases in unemployment will shrink the tax revenues used to fund state pensions and reduce contributions to retirement saving schemes run by employers and individuals. At the same time, cuts to interest rates and new government-backed bond-buying programmes have reduced the income pension funds earn from their fixed-income investments.
Guillaume Prache, managing director of Better Finance, which represents European savers, said that economic headwinds and the emergency measures taken by governments in response to the pandemic represented “the perfect mix” to destroy the long-term value of pension savings.