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Challenges posed by the ageing EU population for the financial sector - Economic and monetary challenges

Personal pension products as an answer to population aging

By Čillíková Júlia - Director of Regulation Department, National Bank of Slovakia


Demographic situation in the Slovak Republic along with all developed countries has been heavily influenced by aging phenomenon. Both the absolute number and the proportion of children to overall population have been decreasing. Moreover, conversely to above-stated, the number and the proportion of the post-productive population have been increasing. The situation is particularly urgent in Central and Eastern Europe caused by an “unbalanced natality” of the 2nd half of the 20th century, which created strong generations aged 35-60 today.

In this vein, current PAYG systems will not suffice and other sources of pensions need to be found. Personal pensions are part of the answer. To this end people should be more responsible in making choices when it comes to retirement. It is necessary for them to take informed decision and not ignore the reality of outside´s world – generations´ mismatch. Our role is to create and safeguard healthy market conditions.

Personal pension products (PPPs) contains different financial products, which fit for pension coverage; e.g. from the insurance, asset management or banking sectors. However, not the variety financial sector´s product, but efficiency and performance are crucial. To achieve this, a solid market needs to be established. Nonetheless, there are still different sectoral rules in place together with different tax incentives in Member states. This truly not helps to achieve really competitive environment.

It is necessary for them to take informed decision and not ignore the reality of outside´s world – generations´ mismatch.

Taking above-stated into consideration, I do believe that, not full uniformity, but at least some level of harmonisation of PPPs regulation is necessary.

The PEPP (Pan-European pension product) can also be part of the answer how to promote competition and efficiency. This can help to improve local market competition and also achieve its ultimate goal – creation of integrated and competitive European internal market in personal pensions.

In conclusion, I am firmly convinced that it is of Member states´ utmost importance to support personal pensions through the tax incentives, equally as it is in other sectors. It surely enables better competition of such products both across sectors and countries.