The European Commission is sending out proposals to introduce a new EU-branded pension product for EU state citizens..
The Pan-European Personal Pension Product (PEPP) is a voluntary personal pension scheme designed to give retirement hopefuls significantly more options in the European market—including member states with limited selections.
If passed, the PEPP system will grant asset managers and insurers access to more than 240 million recipients. The commission predicts this will increase the European personal pensions market to €2.1 trillion ($2.4 trillion) over the next decade. This will also make things easier for country-wide job hoppers to keep all their savings without any transfer issues. They will be granted the right to switch providers both domestically and across borders at a capped cost every five years.
To pool assets more effectively and achieve economies of scale, PEPP providers will also be able to develop these funds across the member states as well.
“Pan-European personal pension products will act to promote competition amongst pension providers, granting consumers more choice of where to place their savings,” said Valdis Dombrovskis, commission vice president, responsible for Financial Stability, Financial Services and Capital Markets Union, said in a press release. “Completing the CMU is also an important element of the Investment Plan for Europe.”
In order to convince savers to make the switch, the EC is recommending national governments provide the best tax options possible. Calculations will take into account each client’s living and working locations when they made their contributions, in an assessment of different tax laws.
Authorized UK PEPP providers established either as individuals or subsidiaries in the EU27 would be eligible to offer the product following the official Brexit in 2019.
The commission estimates out of 243 million EU citizens aged 25 to 39, 67 million (27%) have a voluntary personal pension plan.
The European Parliament and the Council will discuss the PEPP proposals. If adopted, the regulation will begin implementation 20 days after it is published in the Official Journal of the European Union.