Eloy Lindeijer, Chief Investment Management at PGGM, spoke in Brussels on 22 September on behalf of PensionsEurope, the European umbrella organisation of national pension organisations.
He told a packed meeting at the European Parliament, convened for the so-called long-term investment inter-group, that, because of their investment horizon, pension funds are ideal private parties for providing capital for strategic investments in relation to, for instance, (digital) infrastructure and the greening of the European economy. Pension funds can cope better with liquidity risks and they can also invest anti-cyclically if necessary. "Focused on the long term, they make a valuable, but still too limited, contribution to the capital markets."
Due to historically low interest rates and lack of confidence in the financial sector, the potential of pension funds is not used to its fullest, says Lindeijer. These factors are causing difficulties for pension funds as well. But European regulation is also an important factor that causes funds to strain from their natural focus on the long term. Lindeijer therefore called on Brussels to introduce measures that help pension funds keep their view on the long term, despite these challenging circumstances.
Lack of projects
Finally, Lindeijer elaborated on the reasonswhy the pension funds’ potential was not being utilised optimally caused mainly by the lack of suitable investment opportunities. "There are just not enough projects in the pipeline, many projects in the development phase are also too small and risky to be eligible for an investment." Lindeijer did note that Brussels had taken what appear to be some promising steps in this respect. EFSI, for instance, the European Fund for Strategic Investments, already ensures that private and public interests are brought in line with each other by linking private capital to public projects.
Lindeijer said that Brussels must quickly follow up with further steps. “Now it’s time for the next step. We have to move from public-private cooperation to public-private responsibility, in which we define shared goals, work together and share both risk and returns with each other." This statement echoed among those present and was firmly embraced by MEP and ECON president Roberto Gualtierri in his closing words.
Read the speech for Long Term Investment Group of Europees Parliament