Report: Europe needs an integrated pension market. (Briefing).

Pension recipients and providers would benefit greatly from a single, integrated pension market throughout Europe, a trade group reported.

The report produced by the European Financial Services Round Table found that most European citizens "remain blissfully unaware" of a dangerous gap between what they expect to receive when they retire and what state pension systems will be able to afford.

The report calls for a tax system that eliminates penalties on investing in or consuming pension savings across European Union members' borders. It also calls for removal of regulatory barriers for pension holders to change jobs, country of employment or retirement.

A security system should be created that would ensure that funds are properly managed and fund contributions protected, the report said. Transparent disclosure rules for the terms and provisions of pension plans also are needed, as are timely and understandable statements of value of pension funds.

The report found that longer life expectancy, falling birth rates and early retirement mean that EU member states will see retiree-to-worker ratios fall from 1 retiree for every 2.6 workers to 1 retiree for every 1.4 workers by 2040. "Public pension expenditure (could) rise by as much as 30% in the next 40 years, unless prompt action is taken," the report said.

"We will call on politicians at European and national levels to seize the initiative now, before Europe's pension nightmare really does come true," Pehr Gyllenhammar, the Round Table's chairman, said in a statement. Gyllenhammar, who is also chairman of the London-based life insurer CGNU plc, said Europe's politicians must create a single market for pensions.