EU institutions have agreed on the establishment of so-called Pan-European Pension Products. CEC European Managers welcomes the establishment of these retirement products as a contribution to facilitating labour market mobility and capital market competition. However, this individual pension should not infringe on existing collective occupational pensions as the second pillar of pension systems besides state pensions. Until today, occupational pensions have proven to be a resilient complement to public pensions and in many instances also a viable alternative to private individual pension products, especially in terms of accessibility and cost-efficiency.
The regulation on pan-European Personal Pension Products (PEPP) allows individuals to choose amongst European pension product providers with transparent asset portfolios. Consumers will have a choice between a safe default investment option and alternative options with different risk-return profiles. The products will benefit from EU-wide portability, full transparency of the costs of the PEPP and the ability to switch providers. A broad range of actors (banks, insurers, asset managers, occupational pension funds, investment firms) are to be entitled to provide these products.
In sum, CEC European Managers welcomes PEPP as a complementary element for pension systems, especially in states where the occupational pillar of pension systems is weak, as well as a solution for highly mobile managers. It could also increase the internal coherence of financial markets within the EU. Currently, the functioning of the internal market for personal pensions is impeded by the high degree of fragmentation between national markets and the limited degree of portability of personal pension products. This can make it difficult for individuals to make use of their basic freedoms.