Date: 2nd May 2022

21 April 2022 | Financial repression poses a major problem for the protection of savers: policymakers must act and stop using savers' cognitive biases to their detriment.

Facts | On average, over the last 30 years, annual increases in consumer prices ("inflation") have averaged +2% for the euro area[i], a historically very low level. Nonetheless, this means that the real value (purchasing power) of all long-term or pension savings has almost halved since 1992.

Since last year (2021) it is getting much worse, with a sharp rise in inflation, and with real interest rates (= nominal minus inflation) even deeper into negative territory.

For example, French retail investors in capital-guaranteed life insurance contracts lost about €43 billion in purchasing power (real return) in 2021 alone. [ii]  However, French annual inflation was +3.4% in 2021, but +5.1% at the end of March 2022.

Similarly, in Belgium, savers in bank savings accounts lost an estimated 22 billion euros in purchasing power in 2021 alone. [iii] However, Belgian annual inflation was +6.6% in 2021, but +9.3% at the end of March 2022. [iv]

BETTER FINANCE estimates that the losses in real terms will be well over 100 billion euros for French savers alone in 2022.

… But not disclosed to EU savers | Providers, distributors and even public authorities very rarely disclose the returns of long-term savings products in real terms (net of inflation).[v] This is hardly surprising since none of the existing investor protection rules require the disclosure of real performances, i.e., "net of inflation".

Regulatory requirements do not take inflation into account and thus exacerbate the damage suffered by pension savers | Furthermore, existing rules of conduct do not require taking into account the risk of inflation and its exponential negative impact in the long-term on the real value of savings, nor warning people about this risk either.


| Read the full press release below |





[v] There are some exceptions, such as the OECD (see for example pp. 28-29 of and BETTER FINANCE (see for example