The European Commission has today set out long-awaited proposals for a portable pan-European Pension Product (Pepp), which would allow EU citizens to pay into the same pension plan even if they move country and give them greater mobility when they retire.
“The Pepp is an important milestone towards completing the Capital Markets Union,” said Valdis Dombrovskis, the commissioner responsible for financial services.
“It has enormous potential as it will offer savers across the EU more choice when putting money aside for retirement. It will drive competition by allowing more providers to offer this product outside their national markets.”
The plan has been welcomed by the European funds industry association Efama whose newly-elected president William Nott said: “The Pepp will bring much needed scale, choice and competition to the EU personal pensions market.
“I am also confident that the portability of the Pepp will make pension savings more attractive to younger people with increasingly mobile careers and lifestyles.”
Josina Kamerling of the CFA Institute said that the lack of appropriate tax incentives have been a significant barrier to entry for pension providers and investors and that the Commission’s recommendation on preferential tax treatment for a Pepp, whereby national governments would give the product the most favourably tax treatment they are able to provide, was welcome.
“The EU personal pensions package provides a pan-European product that will provide consumers with added choice in addition to existing national regimes,” she said.
In its 2015 member survey on the EU Capital Markets Union, CFA Institute asked its EU-based members whether the introduction of a standardised European pension product would be necessary to strengthen the single market in pension providers. Fifty-nine percent of respondents agreed.
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