The European Commission has published long-awaited legislative proposals on creating a pan-European Personal Pension’s Product (PEPP). The PEPP regime will provide the building blocks for the creation of a voluntary single personal pension product that can be marketed by providers on a pan-European scale. The new regime is intended to sit alongside existing national products rather than replace them, but the Commission hopes the new product will also play a role in building up those national markets where provision of private pensions is still lacking.
The legislative proposals provide a framework PEPPs would have to meet before they can be distributed across the EU. These requirements include providing information to consumers through a PEPP key information document and transparent costs and fees as well as mandating regular communication to savers on accrued savings; capital protection for low risk products; facilitating easy transfer of funds when savers move between EU Member States; allowing savers to switch their savings between products every five years with capped switching costs; and a simple complaints procedure. Providers will be required to invest in line with a ‘prudent person’ but will be able to offer various out-payment options.
The legislative proposal also envisages a greater role for the European Insurance and Occupational Pensions Authority in authorising PEPPS, although their day-to-day supervision will still be carried out by national authorities. Member States will also be responsible for establishing any favourable tax treatment for PEPP investments.
The legislative proposal will now be considered and amended by the European Parliament and Council through normal legislative procedure. A final text is expected to be agreed in late 2018.
View European Commission – Personal pension products, 29 June 2017