The European Commission wants to have “an informed view” by year-end on whether to continue developing a pan-European personal pension product (PEPP).
Jung Duk Lichtenberger, deputy head of the Capital Markets Union (CMU) unit within Directorate-General for Financial Stability, Financial Services and Capital Markets Union, told delegates at Fleming’s CEE Pension Funds Conference in Prague that the Commission would launch a consultation on the subject after receiving EIOPA’s advice.
“Among other things, we will look into which group of people might be needing what type of product,” he said.
He emphasised that any PEPP product would have to be adjusted to demand and should be complementary to other pillars in the pension system.
But he also cited the US as an example where more people were using personal pension plans instead of occupational schemes to ensure their own mobility and have control of their pension savings.
In 2017-18, the Commission aims to “assess feasibility” on a PEPP project following the consultation.
Manuela Zweimüller, head of regulation at EIOPA, pointed out that a PEPP could also be sold cross-border and argued that “all providers should go into this market” of personal pensions, currently dominated by insurers.
Apart from asset managers and banks, the “knowledge accumulated in IORPs can also help to provide a third-pillar product”, she said, while acknowledging that many pension fund providers are prohibited from offering products outside the second pillar.
Zweimüller took pains to emphasise that any PEPP should be part of a “multi-pillar diversification strategy” and complement other pillars.
“There are member states where the first and/or second pillars are not strong, which leaves sufficient room for third-pillar products,” she said.
Matti Leppälä, chief executive at PensionsEurope, said in a panel discussion that it would be important for occupational pensions to have a “clear borderline” with third-pillar products.
“PensionsEurope thinks we need more supplementary pensions, and private pensions can help, especially considering that, in some countries, self-employed people and entrepreneurs cannot get an occupational pension,” he said.
He warned that, while in some countries, voluntary personal pensions are just a top-up for a good second and/or first pillar, “increasingly often they are not a luxury but a necessity to keep a certain benefit level – something you cannot afford to lose”.
Zweimüller and Leppälä said it was important to cater to the different realities of people in the various member states, be they workers in a changing labour market or retirees.
Lichtenberger added that enabling people to switch more easily to different pension providers would put pressure on providers, “which is good, as they will create products useful for customers”.