EFAMA published recommendations for European personal pensions

04 March 2015

The recommendations aim to contribute further towards the creation of an EU-single market for personal pensions.

The recommendations are published in a report, entitled “Towards a Single Market for European Personal Pensions: building blocks for an EU framework” which lays out EFAMA’s key arguments in favour of the creation and implementation of a standardised pension product. To make this proposal and its objectives clearer and easily understandable, EFAMA has renamed the proposed product as the “European Personal Pension” (EPP). 

Highlighting the fund management industry’s commitment to a European Personal Pension, the report’s key observations are:

• A survey used in the report shows that 100% of asset managers would want to take part in the European Personal Pension market as providers of investment solutions, and that one-third of these would also wish to act as distributors


• Such a market would equally help personal pension providers operating on a cross-border basis to achieve economies of scale, as is cleared from the survey: 94% of the respondents would centralize investment management and 65% would centralise the administration function


• A framework for an EU-wide personal pension product has real potential to achieve a more efficient environment for personal pensions, enhancing the choice between different types of pension products and providers


• By removing barriers for cross-borders flows of pension savings, the creation of a European Personal Pension would contribute to a well-functioning Capital Markets Union and enhance the flow of capital to long-term investment projects


• Finally, the EPP would improve the portability of pension saving across borders.  This would simplify life for people working and living in more than one EU member country – a trend that will only become stronger, as more and more people spend a period of their life working abroad.

EFAMA recommends the following measures:

• An EPP should specify an appropriate investment default option.  This could include life-cycle strategies or balanced funds and would be designed to ensure an acceptable level of risk for pension savers


• Pre-enrolment communication should be standardized and applied uniformly by all providers in a way that facilitate the comparison between EPPs, to help consumers make the right choice


• The EU framework for an EPP should be sufficiently standardized to reduce distribution costs and in this way encourage more consumers to save for retirement

Peter De Proft, Director General of EFAMA, comments: “The idea of a European Personal Pension - if implemented with an EU passport for cross-border selling - holds significant promises in the contribution it can bring to the Capital Markets Union project, and to the European Commission’s broader goals to stimulate jobs and growth creation in the EU as well as retirement savings. EFAMA is eager and well-placed to participate in such an ambitious project. We believe our industry has a crucial role to play in this initiative which has the potential to significantly improve the well-being of European citizens’.

Full press release

Full report

© EFAMA - European Fund and Asset Management Association