The National Association of Pension Funds (NAPF) has urged EU policymakers to see through the lens of investors as plans are unveiled for a single EU capital market.
With the publication of the Green Paper on Building a Capital Markets Union, NAPF welcomed the paper's emphasis on strengthening European capital markets and the "Commission's commitment to creating an environment conducive to long-term investment", but emphasised policymakers should act according to the interests of members of pension funds.
Joanne Segars, chief executive at NAPF, said: "It is important to remember that any reforms to the functioning of European capital markets should be seen through the lens of the providers of capital, in particular pension funds. This will help policymakers to avoid unintended consequences where intermediaries benefit at the expense of funds and ultimately future pensioners.
"The NAPF's members have over 1tn of investments in the EU and global economy. They are looking to policy-makers to help deliver the supply of investment opportunities needed that are suitable for institutions investing to meet long-term liabilities.
According to the Green Paper, the European Commission (EC) hopes to "strengthen investment for the long term" by building a single market for capital for all 28 member states - a "Capital Markets Union".
The EC aims to enhance the flow of capital from investors to start-ups, SMEs and long-term projects. The Commission also wants to remove barriers to cross-border flows of finance and diversify sources of funding in order to reduce bank lending.
The NAPF said investing in other EU states was less attractive because economies in other EU countries might be less flexible than the UK economy.
Segars said: "Very often the reasons for pension schemes choosing not to invest in other EU member states relate more to the rigidities in some national economies as opposed to restrictions on cross-border investments. We hope the Green Paper debate will home in on the problems that need discussing."
A consultation on the Green Paper runs until 13 May 2015. The EC aims to build the Capital Markets Union by 2019.
