The European Commission (EC) has proposed the creation of a pan-European personal pension product, which it said will be easily transported from one EU member country to another.
During opening remarks of the EC’s Mid-Term Review of the five-year Capital Markets Union Action Plan on June 8, Valdis Dombrovskis, the EC’s vice president for the Euro and Social Dialogue, said the Commission will soon initiate new legislative proposals on personal pensions, covered bonds, and cross-border securities ownership.
He also said that, in a few weeks, the EC will put forward its proposal for a pan-European personal pension product, or PEPP. According to Dombrovskis, who is also in charge of financial stability, financial services, and capital markets union, pension funds are currently underused in the EU, with only 27% of Europeans between 25 and 59 years old enrolled in a pension product.
“A Pan-European Pension Product would be a unique ‘portable’ savings product that could contribute to unlocking this huge potential,” said Dombrovskis. “It would create a ‘toolbox for businesses’ to propose safer, more cost-efficient, and transparent personal pension products on a pan-European scale.”
For savers, PEPP would be a new option, said Dombrovskis, with the advantage of easier switching, and cross-border mobility. “In this way, Pan-European Pension Products could help provide the investment Europe needs,” he said, “while generating additional income for pensioners—an important point given the demographic challenge Europe faces.”
The EC paved the way for the proposed pan-European pension in 2014, when it launched a defined contribution retirement savings vehicle for European research institutions known as RESAVER. Rollout of RESAVER is expected to start across the European Economic Area in 2018.
RESAVER will allow researchers to move freely throughout the EU without having to worry about preserving their supplementary pension benefits. The plan also will help employers attract researchers in an increasingly competitive environment, said the EC. The vehicle offers cross-border pooling of pension plans, continuity of the accumulation of pension benefits as professionals move; lower overhead through economies of scale; access to high-quality investments regardless of the country where the employee is based; a pan-European risk pooling solution covering death benefits; and a centralized portal for tracking and administering pension contribution.