The pensions industry is divided over the role of the Pan-European Personal Pension Product (PEPP), with concerns that it could blur the lines between the second and third pillars, while others see it as a tool to increase pension coverage.

Speaking on a panel at the CBBA-Europe Annual Conference, European Association of Paritarian Institutions (AEIP) executive director, Simone Miotto, said it was “not surprising” that the PEPP had previously failed to deliver the results politicians and the European Commission expected.

Miotto emphasised that PEPP should stand for Pan-European Personal Pension Product, despite a proposal to change its name to “Europension” or another term.

He argued that the legislation should continue to reflect the product’s status as a personal pension, warning that allowing it to be distributed through employers could blur the distinction between the second and third pillars.

“I understand in some countries, it could be distributed through employers,” he said. “Of course, there is no definition of [this] at European Union (EU) level. So, I'm a bit worried about the blurring of the line between the third and the second pillar.”

Miotto also raised concerns over the potential development of an occupational PEPP, particularly where employers could use the product to fulfil auto-enrolment obligations.

He said that, from a saver’s perspective, the workplace PEPP should not become a cheaper alternative for employers that allows them to avoid obligations to participate in occupational pension funds, where savers could benefit from collective arrangements.

Adding to the debate, CBBA-Europe secretary general, Francesco Briganti, said CBBA was “very much in favour of the development and the improvement of the PEPP”, including the workplace PEPP.

“We keep saying that we should raise occupational pensions coverage, but then we also know that in many countries, professional pensions are not developed at all,” he explained.

Briganti said concerns that the workplace PEPP could move pensions from the second pillar to the third should not prevent the development of an additional tool to increase coverage.

“It seems kind of a process of geometry, but we are not talking about geometry, we are talking about pensions and income for the future of Europeans,” he said.

He added that the proposal for a workplace PEPP included safeguards around social systems, collective agreements and the role of social partners.

Briganti said that, despite agreement on the need to increase pension coverage, there is still disagreement over whether the workplace PEPP could blur the lines between the second and third pillars and what risks this could create.

“We have a huge problem of coverage. We are talking about 20 per cent of Europeans saving for an [occupational] pension. We are missing 80 per cent of Europeans, and we are still talking about how this could create a problem with the other in a community of the 20 per cent,” he argued.

Given this, Briganti stressed that “there is room for every tool that might be useful” in increasing coverage.

Additionally, he suggested that EU member states are creating “unacceptable” tax discrimination between national pension products and the PEPP.

The European Commission’s original proposal sought to ensure that PEPPs received the same tax treatment as comparable national personal pension products, including access to equivalent tax incentives.

However, Briganti argued that the Council’s position would allow member states to continue applying different tax rules, potentially putting PEPPs at a disadvantage.

He stressed that this issue goes beyond the product itself, as unequal tax treatment could undermine the development of the internal market and make it harder for Europeans to access pension products across borders.

While Briganti acknowledged that there are challenges surrounding the PEPP and its interaction with occupational pensions, he argued that member states have a responsibility to address these barriers and ensure that the PEPP can contribute to improving pension coverage across Europe.

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