European Commission policymakers should ease the investment restrictions around the proposed Pan-European Personal Pension Product (Pepp) when they meet later this year, said an industry body.
The European Fund and Asset Management Association (Efama) unveiled proposals to simplify and enhance the Pepp Regulation, with the EC set to propose regulatory changes in the coming months.
Efama is advocating targeted reforms to increase provider participation and drive demand.
Current stochastic modelling and capital guarantees limit providers to low-yield fixed-income assets, said Efama, and removing these constraints would enable a broader range of investment strategies, benefiting both retail investors and the economy.
Pepp is a key pillar of the Savings and Investments Union, designed to boost retirement savings and strengthen EU capital markets. While Efama’s recommendations involve amending the regulation, they do not call for a major overhaul. Instead, they focus on increasing flexibility, accessibility, and attractiveness for both providers and savers, said the Brusells-based organisation.
No mandatory advice
Other key proposals include optional national subaccounts. Efama says Pepp providers should have the choice, rather than the obligation, to offer national subaccounts. This flexibility would lower administrative barriers and encourage more firms to enter the market.
Also, there should be no mandatory financial advice for Basic PEPP, says Efama. Since the Basic Pepp is designed as a simple and safe pension product, Efama proposes allowing providers to offer it without requiring costly financial advice, instead relying on digital tools to inform savers.
Efama said it was also concerned that a 1% fee cap discourages providers. Instead, the focus should be on value for money, ensuring savers receive appropriate returns.
Further, to compete with national pension products, the Pepp must benefit from the most favorable tax treatment available across EU Member States, Efama said, and added that allowing Pepp providers to offer the product as an occupational pension would broaden second-pillar pension coverage, particularly benefiting smaller employers.
Bernard Delbecque, senior director for economics and research at Efama, said that simplifying regulations, removing the fee cap, and introducing tax incentives would unlock investment and make the Pepp more attractive.
Tanguy van de Werve, Efama director general, added that despite current market volatility, long-term pension products are essential for stability and growth.
