EFAMA welcomes the Commission’s legislative proposal on the pan-European Personal Pension Product

29 June 2017

EFAMA fully supports the Commission’s proposed Regulation for the creation of a pan-European Personal Pension Product (PEPP) that is complementary to and supportive of existing Member State and occupational pensions.

EFAMA has been a long-standing supporter of this legislative initiative for a number of reasons including:

• The demographic need to encourage citizens in many EU Member States to save more for their retirement and increasingly investing more in capital markets-based and long-term instruments. This will support investment in the real economy and contribute to the success of the Capital Markets Union (CMU) initiative.
• The high degree of fragmentation between national markets, which prevents cross-border distribution of personal pensions and results in limited competition between different categories of providers, higher prices and no portability of personal pensions across Member States.

EFAMA supports the broad regulatory framework proposed by the Commission to develop the PEPP market. In particular, EFAMA strongly supports the Commission’s aim of creating a simple, standardised personal pension product that can be passported throughout the EU. This will generate economies of scale and, in turn, benefit consumers through lower costs.  

EFAMA welcomes the Commission’s recommendation to Member States to give PEPPs the most favorable tax treatment available to their national personal pension products.

EFAMA notes, however, that the PEPP Regulation will likely only produce all of its expected positive effects if there is sufficient flexibility to enable different types of providers to offer a PEPP and encourage the development of different types of default investment strategies, including life-cycle strategies. These life-cycle strategies offer long-term investment market exposure and risk diversification throughout the accumulation phase, whilst reducing the impact of market risk as the beneficiary approaches retirement. Not only is such a strategy consistent with the overall objectives of the CMU agenda, it is already considered as well-suited for default option by the authorities in many countries throughout the world. It should be up to the PEPP providers to decide whether they want to offer life-cycle investment strategies or strategies with minimum return guarantees as a default option.

Press release

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