Fireworks in Frankfurt
You know it’s going to be a long day when the highlight of your commute through a new city is the striking nature of the PricewaterhouseCoopers tower on the skyline.
But I’m already having a better day than the only other journalist in the room—he’s wearing a Snoopy t-shirt. His suitcase didn’t manage the trip from London and, consequently, he is shuffling around at the back.
It is grey and dreary in Frankfurt, where Euro Finance Week is being hosted. Today is the ninth annual European Pension Funds Congress at the appropriately named Congress Center. Its drab exterior reflects the gloomy mood inside. Perhaps in a conscious effort to distract us, the various rooms have exotic names: Harmonie, Illusion, Fantasie… After a glass of orangensaft, I venture into Spektrum, and into the congress.
Art by Tim Bower
The first two speakers do little to brighten the day. Pierre Bollon, vice chair of PensionsEurope, is first to the podium. “Pension funds are being seen as reservoirs of cash by some governments,” Bollon states to the half-empty room. “They are being raided at a time when we all know we have to save more for the future.”
Way to start us off with a bang. His comment that “we used to have a risk-free rate, now we have no rate but a lot of risk” earns a brief, wry chuckle from attendees.
Anne Drouin, chief actuary and chief of public finance at the International Labour Organisation, surprisingly doesn’t lighten the mood either. Her PowerPoint slides set out the scale of longevity and wage inequality problems facing European governments and pension providers. A sullen silence falls across the audience.
Then the fireworks start. Enter Gabriel Bernardino, chair of the European Insurance and Occupational Pensions Authority (EIOPA). The room is suddenly full.
Bernardino tells us there are to be stress tests for European pension funds in 2015 and mentions the feared “holistic balance sheets,” a concept intended to help pensions and their sponsors see the bigger picture on funding.
Stefan Nellshen, CFO and director of asset management at pharmaceutical giant Bayer’s pension fund, challenges Bernardino, implying EIOPA has changed its mind on these balance sheets. Bernardino rejects this outright. Nellshen looks unmoved. He’s on a panel later with EIOPA Head of Policy Justin Wray—this could get spicy.
Sure enough, Nellshen launches a scathing attack on both EIOPA’s plans and the information requirements proposed by the European Commission.
“Giving information to members only helps those who can understand it and can make a choice,” he argues, looking directly at fellow panellist Yann Germaine, policy officer for internal markets and services at the European Commission. “Please take care not to introduce requirements for information disclosure that don’t make sense.”
Germaine responds calmly that the proposals call for “concise” information, and there is nothing wrong with telling people what their pension is worth.
“That’s not what I said,” Nellshen counters. A couple of other panellists shift awkwardly in their seats as his voice gets slightly louder. “By law in Germany, that information is given to members.”
He rails against plans to increase transparency, arguing strongly that some of the information funds will potentially be required to supply to members will be irrelevant.
Nellshen then attempts a verbal tussle with Wray, but it is diplomatically batted away.
Questions from the floor target the policy officials. It is obviously a day to vent frustration with the European regime. The quirkiest moment is a video of cars, vans, and lorries performing increasingly bizarre and dangerous manoeuvres on busy roads in Croatia, which is ripe for infrastructure investment, we’re told.
Wray suffers further questioning in the final panel, and CIO suspects he wishes he was somewhere else—or at least hiding at the back in a Snoopy t-shirt.