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Towards a pan-European personal pension product?

On 29 June 2017, the European Commission tabled a proposal for a regulation on a pan-European personal pension product (PEPP).  Only 27% of 25 to 59-year-old Europeans have actually taken out such products. The PEPP could be distributed throughout the 27 Member States (post-Brexit) by different market operators.

Towards a pan-European personal pension product?

The form of this new product has not yet been finalised and further changes could be made over the coming months before the promulgation of the regulation in the Official Journal of the European Union. France is seeking to make its future Pension Savings Product (PER), derived from the PACTE Law, eligible for PEPP status and is therefore hoping to see a convergence of the characteristics of both products. 

A PEPP designed to:

  • Reduce the pension gap in a context of declining public pensions and demographic transition.
  • Meet the needs of mobile citizens and the self-employed, who remain excluded from public and private pension schemes.
  • Channel investments into financing the real economy.
  • Provide a solution for Member States lacking their own pension solutions.

An identical product throughout Europe

  • Open to a large number of providers: insurers, banks, professional pension funds, investment and asset-management firms.
  • The discussions in progress point toward the adoption of a principle of two default investment options – one option corresponding to a capital guarantee and the other based on risk-mitigation techniques. 
  • The PEPP should give freedom of choice for withdrawals, between income and capital.
  • Standardised access to key information, such as management costs.
  • Opportunity to change providers after 5 years with capped transfer costs. Option for policyholders who relocate to another Member State to keep their initial PEPP.

The Commission has also published a recommendation encouraging Member States to enable the PEPP to benefit from the same tax treatment as other similar domestic products.

The PEPPs that will be eventually marketed must first be officially approved by the European Insurance and Occupational Pensions Authority (EIOPA).

Through the PEPP quality label, valid throughout the EU, the Commission is hoping to provide a pension savings investment that is common to all citizens in Europe and to triple the European pension savings market over the next ten years.



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