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In a working document prepared for the parliamentary Economic and Monetary Affairs Committee (ECON) ahead of it discussing the PEPP, Dutch MEP Sophie in ‘t Veld said a well-developed third pillar must contribute substantially to improving the adequacy and sustainability of existing pension systems.
However, she also said further development, strengthening and reform of first and second pillar pensions must be prioritised.
The European Commission proposed a regulation on a PEPP in June. In ‘t Veld is the European Parliament’s rapporteur, and will therefore lead and coordinate ECON’s work on the proposal. The working document reflects her initial views – or, as she said, “the policy options and dilemmas we have to respond to”.
Some in the European pension fund industry are unhappy about the PEPP. The German occupational pension fund association, for example, has opposed its introduction, saying the focus should be on expanding workplace pension provision rather than on private pension products. A German corporate pensions executive has criticised the PEPP as “the answer to a question nobody asked”.
Many others have welcomed the idea of a PEPP in general, but have been quick to raise questions and doubts about its design and feasibility. Sticking points include tax treatment, whether or not there should be a default option with capital protection, and supervision.
In the ECON working document In ‘t Veld described the situation: “There is broad support for the idea of PEPP, but the context is extremely complex and politically sensitive. The differences between [the] 28 member states of the EU are huge and intricate.”
“However, the status quo is not an option,” she said.
The proposal for a PEPP was timely and appropriate, she added.
In ‘t Veld has previously said lawmakers needed to take care not to undermine well-functioning national pension systems where these exist.