Europe 'has £315bn pensions gap' By Ed Crooks, Economics Editor, in London Published: March 10 2003 22:07 | Last Updated: March 11 2003 2:52 Europeans need to save an extra â¬456bn (£315bn) a year to preserve the level of retirement benefits while holding down the cost of public pensions, Europeâs leading financial services companies claim. The European Financial Services Round Table, representing institutions such as Deutsche Bank, ABN-Amro, Axa and Barclays, has written to European leaders urging them to speed up the creation of a single market in financial services to help solve Europeâs pensions crisis. Pehr Gyllenhammar, chairman of the Round Table and of Aviva, the UKâs largest insurer, said: âThis is a call for very urgent action. If European governments deliberately want to erode the livelihood of 377m and more people because they dare not touch the pensions bomb, that is not responsible behaviour.â European Union government figures show that if policies remain unchanged, the cost of state pensions in the EU is expected to rise from 10.4 per cent of gross domestic product in 2000 to 13.6 per cent by 2040. For its estimate, the Round Table supposed that the cost to the state in each EU country were capped at its 2000 share of GDP, but pensioners were still to receive the same level of benefits. Based on the current best projections, private savings for the next four decades would have to be 456bn a year higher about 5 per cent of the EUâs GDP in 2002. The greatest need for increased savings is in France, which according to the Round Table needs an extra â¬137bn a year. Mr Gyllenhammar said making personal pensions portable within the EU, opening national markets to competition and allowing greater economies of scale were essential to encourage private saving. The Round Table calculates that the European fund management industry could save 10bn a year in administration if the average EU fund was were as large as the average US fund. The attempt to create a single market in financial services has been seen as one of the relatively successful elements of the economic reform programme that the EU committed itself to at the Lisbon summit in 2000. Of the 42 measures in the financial services action plan, 32 have so far been signed off. But Mr Gyllenhammar said progress had been slow, with the directives only rarely translated into genuinely open markets. The Round Table urged Greece, Italy and Ireland, the current and two next holders of the EUâs rotating presidency, to agree to complete the single market in financial services by June 2004.