FX.co ★ Pensioners to boost economy!

EU policy makers decided that savings of retired citizens are capable of boosting the EU’s economic recovery. The European Insurance and Pensions Committee was assigned to work out a draft law "to mobilize more personal pension savings for long-term financing". In case the bill is approved, pension savings will be able to release the EU economy from its heavy reliance on bank financing and find other means of funding small and medium-sized businesses. It is supposed to create a liquid and transparent secondary market for trading corporate bonds in the EU. Besides, policymakers mean to invest these funds in large-scale infrastructure projects. Such an idea appeared exactly when the whole EU is lacking acutely credit funds available for businesses. Meanwhile, banks complain that post-crisis rules have been made much stricter forcing them to hold larger safety cushions of capital and liquidity in case of paying off would-be losses. Indeed, individual retirement savings are an excellent tool for investments. Such savings have been managed successfully in a variety of cases. Pension savings are being under consideration not only in Europe. For example, Russia’s President Vladimir Putin suggested a similar draft in spring 2012. The President set the government a task to carry out a feasibility study for developing the draft law. In July, the head of state made a decision to allocate a part of the pension funds for purchasing bonds issued for financing infrastructure projects. In particular, according to officials from the Ministry of Labor, such funds were earmarked for the construction of orphanages, nursing homes, kindergartens, and other social facilities. Besides, the Prime Minister ordered to expand Vnesheconombank’s authority over the management of Russian nationals’ personal pension savings.