EU Commission proposes changes to relaunch PEPP and promote European supplementary pension provision
The new rules aim to make the European personal pension product more flexible, accessible and competitive by removing barriers and incentivising membership in all Member States
From our correspondent Beda Romano
BRUSSELS - In an effort to make progress towards a financial union, the European Commission on Thursday, 20 November presented legislative amendments to the regulation that will come into effect in 2022 and establish a European-style pension product (the so-called PEPP). The aim is to harmonise European consumers' choices in the field of supplementary pensions, to put savings to better use, and to facilitate the emergence of a capital markets union.
Explains Maria Luís Albuquerque, the Financial Services Commissioner: "Everyone should be able to maintain a good standard of living in retirement. That is why we have adopted an approach to strengthen supplementary pensions, which complement, not replace, public pensions (...) I urge all stakeholders (...) to join our efforts, as effective implementation at national level will be crucial to achieve these shared objectives.
The revision of the regulation aims to make the pan-European personal pension product "amore attractive, accessible and affordable option for savers", the European Commission explains. "The aim is to remove existing requirements and design features that have hindered the spread of PEPP, while continuing to ensure a high level of consumer protection." A so-called basic offer will be able to be sold without advice.
Savers will also have access to à la carte products. In this sense, the PEPP will be adaptable to different investor preferences and suitable for various types of providers, including asset managers and insurers. "The PEPP will also be open for use in the workplace and may serve as an automatic enrolment tool, where permitted by national legislation and in full respect of the prerogatives and autonomy of social partners."
Since its inception, the PEPP has had very relative success. Brussels cites the 1% fee cap (fee cap, in English), the absence of tax incentives in many countries, and administrative complexity. In this sense, the amendments to the regulation, which will have to be approved by the Parliament and the Council, envisage that the cap on commissions will be removed in order to incentivise the offer by financial intermediaries, while member states will be required to offer comparable tax treatment to domestic products.
