Europe’s asset management industry on Wednesday called on governments across Europe to take additional actions such as introducing new tax incentives to protect retail investors and savers against inflation.
Efama, the European fund and asset management association, said inflation has become “an undeniable reality” that “has a very damaging effect on bank deposits.” The increasing cost of living also underlines what it calls the “opportunity cost” of saving excessively in bank deposits. People with high savings stand to lose purchasing power because inflation, at the current high levels, effectively erodes the value of their savings.
Efama said governments should encourage savers to shift part of their money away from bank deposits into personal pension products, either through a one-off transfer or a gradual shift.
Awareness campaign needed
To encourage people to act swiftly, the establishment of the tax advantage should be limited in time and could be part of a campaign to increase people’s awareness about the opportunity cost of keeping an excessive amount of savings in bank deposits, the association said.
“Encouraging households to focus on long-term wealth creation and target an adequate retirement income should be a key priority for policymakers,” said Tanguy van de Werve, Efama’s Director General.