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Saturday 15 December 2018


Spring Conference

European Commission reveals plans for cross-border pension product

Written by Natalie Tuck

The European Commission has revealed its plans for a Pan-European Pension Product (PEPP) designed to give savers across the Union better options when saving for retirement.

The Commission announced a cross-border pension product as one of the key measures of the mid-term review of the Capital Market Union, a project to create a single market for capital in the EU. It is hoped such a product would boost the number of people enrolled in a pension across Europe and add to investment in the economy.

The proposals aim to provide pension providers with the tools to offer a simple and innovative PEPP. They will have the same standard features wherever they are sold in the EU and can be offered by a broad range of providers, such as insurance companies, banks, occupational pension funds, investment firms and asset managers. They will complement existing state-based, occupational and national personal pensions, but not replace or harmonise national personal pension regimes.

It is hoped the introduction of a PEPP will bring more choice to savers, from a wide range of PEPP providers and benefit from greater competition. Savers will be able to switch providers, both domestically and cross border, every five years, at a capped cost. The PEPP will portable between member states, i.e. PEPP savers will be able to continue contributing to their PEPP when moving to another member state.

In addition, the Commission has also recommend that member states grant the same tax treatment to this product as to similar existing national products.

Commenting, European Commission vice-president Valdis Dombrovskis, responsible for financial stability, financial services and the CMU said: "The pan-European personal pension product is an important milestone towards completing the Capital Markets Union. It has enormous potential as it will offer savers across the EU more choice when putting money aside for retirement. It will drive competition by allowing more providers to offer this product outside their national markets. It will work like a quality label and I am confident that the PEPP will also foster long-term investment in capital markets."

In addition, European Commission vice-president Jyrki Katainen, responsible for jobs, growth, investment and competitiveness said: "Today's proposal is another example of the benefits that can be derived from delivering the Commission's Capital Markets Union Action Plan and completing the single market for capital in the EU. Pan-European personal pension products will act to promote competition amongst pension providers, granting consumers more choice of where to place their savings. Completing the CMU is also an important element of the Investment Plan for Europe. I am pleased that this proposal will also work to channel savings towards long-term investments, helping to achieve the Investment Plan's objectives of upgrading infrastructure, boosting growth and supporting jobs."

The PEPP proposal will now be discussed by the European Parliament and the Council. Once adopted, the Regulation will enter into force 20 days after its publication in the Official Journal of the European Union.

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