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The EU must "stick together" amid Brexit challenges as a strong economy is needed to provide pensions, Pensions Europe chairman Janwillem Bouma says.

As the negotiations over Britain's departure from the EU continue, he said it is important pension benefits continue to be protected post-Brexit, while schemes need to keep apace with demographic and macro-economic developments.

Speaking at the Pensions Europe conference in Brussels on 7 June, Bouma said: "We hope Brexit doesn't negatively affect our economy. We also hope it does not affect important pension rights for member benefits accumulated before and after Brexit - for those living and saving in the UK and Europe retrospectively and for those already retired."

However, Bouma further noted that despite the uncertainty of Brexit, "we do know that pension savings are continuously affected by the changing world at all levels".

He added: "These include demographic changes, changes in the labour market, working relations, technology, investment and policies."

Asset management

There are also concerns that if there were to be a ‘hard Brexit,' it would cause problems for asset managers due to current passporting rules. This could lead to a difficult relationship between the UK and the EU post-Brexit.

Speaking at a separate session, Centre for European Policy Studies chief executive Karel Lannoo noted:

"In terms of sectors most concerned about a ‘hard Brexit', these are essentially wholesale financial markets, and of course, the asset management sector is a very important part of that."

He added that the UK has become "very successful" at delegating the management of mainland Europe-based funds to London, and then selling those funds to other countries, such as Ireland and Luxembourg.

This could pose issues for asset managers as the UK may not accede to the European Economic Area agreement (EEA) post-Brexit. The EEA brings together EU Member States and the three EEA European Free Trade Association states into a single market.

If the UK cannot negotiate an arrangement with equivalent access, it will become a "third country" and alternative asset managers will lose their right to manage funds based in other EEA states.

They may also lose their right to market UK-domiciled funds to investors in other EEA signatory states, as current passporting rules may fall away or the UK may fail to negotiate a bespoke agreement. This may also affect insurers.

Lannoo concluded that if the UK and EU have legal regimes, this may also create many more problems than expected, because current levels of interaction will no longer exist.

"Will the UK asset management business remain on the side of the EU and try to hold an equivalent relationship to its current one, or will it move to the US side and argue they are more important for us?"

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