The European Commission today announced the launch of a new class of pan-European personal pension products designed to help consumers across the EU save for retirement.
This new class of pension product is designed to work by giving European pension providers “the tools to offer a simple and innovative pan-European personal pensions (PEPP) label”.
In a statement on its website, the European Commission said the PEPP was of a new type of voluntary personal pension which is designed to give savers “more choice when they are putting money aside for old age, and provide them with more competitive products” than has generally been available to them until now.
Currently, just 27% of Europeans between 25 and 59 years old have enrolled themselves in a pension product, the European Commission noted, adding that PEPPs “would contribute to unlocking this vast potential and boost investment in our economy”.
“PEPPs will have the same standard features wherever they are sold in the EU, and can be offered by a broad range of providers, such as insurance companies, banks, occupational pension funds, investment firms and asset managers,” the commission said.
“They will complement existing state-based, occupational and national personal pensions, but not replace or harmonise national personal pension regimes.”
The new products will also ultimately bolster the European Commission’s plan for a Capital Markets Union by helping to channel more savings to long-term investments in the EU, the statement went on to note.
‘Harmonise tax treatment’
Separately, the commission said it was recommending that EU member states grant the same tax treatment to this product as to similar existing national products, to ensure that the PEPP is better able to “[get] off to a flying start”.
The new products will also ultimately bolster the Commission’s plan for a Capital Markets Union by helping to channel more savings to long-term investments in the EU.
Valdis Dombrovskis, the commission vice president responsible for Financial Stability, Financial Services and Capital Markets Union, said the proposed pan-European personal pension product was “an important milestone towards completing the Capital Markets Union”, and that it had “enormous potential, as it will offer savers across the EU more choice when putting money aside for retirement”.
The PEPP is one of several key measures announced in a review last month of the proposed Capital Market Union, a European Commission project which aims to create a single market for capital in the EU. According to the commission, the PEPP would be a supportive component of the goals of the proposed CMU.
To view and download a four-page Pan-European Personal Pension factsheet, on the European Commission’s website, click here.