Over the years there have been a number of European initiatives to improve the quality of retirement products and to contribute to the development of safer, more cost-efficient supplementary regimes which further facilitate the mobility of workers within the European Union.
As part of the European Commission's Capital Markets Union Action Plan, the Regulation of the European Parliament and of the Council on a Pan-European Personal Pension Products (PEPP) creates a legislative framework for a new individual pension product, complementary to national pension regimes, offering solutions or widening the choice of savers for voluntary retirement savings.
The Regulation provides a harmonized set of key features of the PEPP, such as minimum contract content, registration, type of providers, information provision and distribution, investment policy, switching providers and portability.
PEPPs are subject to an application for registration with the competent national authorities and may be offered by financial institutions from different sectors, including life insurance companies and institutions for occupational retirement provision (IORPs) that are authorized, under national law, to manage individual retirement products.
Each PEPP can provide a maximum of six investment options, including a default investment option called a Base PEPP. The Base PEPP shall be a simple, safe and cost-efficient option and may have the underlying application of risk mitigation techniques consistent with the aim of ensuring capital protection or providing a guarantee of the capital invested.
In terms of transparency, the regulation provides for the provision of standardized information, namely the preparation of a key information document (KID) on PEPP and an annual statement on PEPP benefits for savers.
The pan-European dimension of PEPPs could be developed, not only at the provider level, through cross-border activity, but also through portability, through the possibility for savers to open a sub-account for PEPPs in their new Member State of residence.
PEPPs and PEPP providers shall be listed in a central public register to be established by the European Insurance and Occupational Pensions Authority (EIOPA). EIOPA will also be responsible for developing draft technical regulatory and implementation standards, for the purpose of detailing some of the issues of the regulation, such as the provision of information, risk mitigation techniques and costs and fees associated with Base PEPP.
The characteristics not covered by the regulation or the applicable Union sectoral law are subject to national provisions. This flexibility is important so that PEPP can be adapted to different national realities, in particular to the established regarding the granting of tax incentives.
The final text of the Regulation, adopted by the Council of the European Union on June 14, which is awaiting publication in the Official Journal of the European Union, can be found at: