ECMI: Ceci n’est pas un PEPP

07 May 2019

Karel Lannoo writes that not much is left of the Personal European Pension Product (PEPP) as intended by the European Commission in June 2017.

Proposed as a core element of the Capital Markets Union (CMU), the text as agreed between the European Parliament (EP) and the EU Council has become unclear, unattractive and unsuitable. The EP should not have rushed into signing off on an inadequate measure, or the EU Commission would have done well to withdraw the text.

Where the PEPP was designed initially as an insurance or savings product, it has become an insurance product only, as there is always a guarantee element involved. This is possibly what made the text so much more onerous, as this is the first EU-wide insurance product regulation. But this also means that it cannot become a UCITS or achieve their success, as we discussed in a previous piece. This is a missed opportunity. The EU is not only in need of a large-scale portable private pension product, but also of a long-term savings product, with lower liquidity requirements than a UCITS and more limited withdrawal options. The PEPP text as adopted leaves the impression that it is impossible to construct a truly EU-wide long-term savings product.

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