Are Pension Funds the Saviours of European Infrastructure?

Bratislava, February 24, 2015. Even though seven years have passed since the financial crisis struck, European investors are still very cautious when it comes to new projects. The financing of a 300 billion investment package of the new leader of the European Commission would thus be hanging in the air were it not for pension funds, which might emerge from this game as the strongest player – and in a sense also as the saviour of European infrastructure projects.

Europe has to find a way of facing current threats and satisfying the needs of the market. “Failure is not an option,” said the new head of the European Commission, Jean-Claude Juncker, for Euranet Plus. He intends to avoid publicuse troubles in such partnerships. Leverage, for example, is a huge problem for most of the parties involved, namely the European Investment Bank and the European Fund for Strategic Investment. It is questionable whether these investors are willing to undertake the risk and invest in countries which need it most or are likely to invest in more developed countries in Northern Europe which are able to return the investment with profit.

As pension funds are based on long-term strategies, they would be the ideal source of project finance for infrastructure. Nevertheless, pension funds have taken quite a cold attitude. Before they opt for cooperation, they will surely thoroughly consider all the pros and cons; it is necessary to think about the diverse issues of saving resources, implementation of the most appropriate strategies, modifications of already existing systems and many other aspects. In Europe, even though the liquidity ratio is quite high, no one can blame the companies for being rather sceptical, even towards clearly favourable investments. The situation might get better with improving business conditions and the implementation of new tools for enhancing the business environment. Be that as it may, despite all the opportunities money from pension funds might bring, the investment package of the new EC leader has not yet gained enough support and credibility and is generally viewed as a daring wish rather than a feasible plan.

Strategies in pension funds, the current situation on the market and future perspectives will be discussed at the 2nd Annual Pension Funds in CEE Conference, taking place on 18 – 19 March 2015 in Boscolo Prague Hotel. The conference will host 24 experts from across Europe. The participants will get a chance to compare their viewpoints with the first-hand experiences of representatives from eight banks and hear about the pension systems operating in the Netherlands, the United Kingdom, Lithuania and Romania. There will also be two panel discussions with panellists from the Ministry of Finance of the Czech Republic, Ministry of Finance of the Slovak Republic, Secretary General and CEO of PensionsEurope and the DG Internal Market and Services, Insurance and Pensions Unit from European Commission. A special guest will be Theodore Economou, CEO of the Swiss CERN Pension Fund and winner of several investment strategies awards. Other award-winning speakers are Vladimir Bezdek and Darren Philp. The goal of the conference is to discuss a large variety of topics and set the pension funds development on the right path.