BETTER FINANCE, the European Federation of Investors and Financial Services Users, has released its Pensions Report 2023, uncovering the dire challenges confronting long-term and pension savers across 17 EU Member States in the aftermath of a tumultuous 2022.
In what is termed an "annus horribilis," the report exposes the setbacks faced by savers, with disastrous returns observed across multiple product categories. The key finding is the worrying ongoing trend of inadequate nominal returns failing to compensate for inflation, resulting in a significant loss of purchasing power for countless European savers and investors.
The report underscores the underlying issues contributing to this crisis since many years. Years of bullish markets prior to 2022 did somewhat improve long-term returns, but many products now struggle to cover inflation. Asset allocation, with the main part invested in bonds with negative yields and high levels of fees, is the main culprit eroding net returns. Additionally, lack of transparency on charges compounds the difficulty for savers to compare pension providers and products.
In 2022, surging inflation, a Eurozone bond market unlikely to replicate past returns, and a growing reliance on private pensions together paint a dire outlook for European pension savers.
BETTER FINANCE emphasises the urgent need for action from EU and national authorities, particularly in implementing proposed rules on product oversight, governance, and information to investors. The report also stresses the challenges in obtaining fundamental data, calling for transparent and coherent reporting frameworks, and standardised reporting requirements for national competent authorities.
- Read the Will you afford to retire? | The Real Return of Long-term and Pension Savings | 2023 Edition | Executive Summary
- Watch the BETTER FINANCE Pension Roundtable hosted on November 30th 2023
⬇️ Read the full press release below ⬇️