The European Fund and Asset Management Association (EFAMA) has reiterated its call for a pan-European personal pension product (PEPP), saying it would strengthen Europe’s three-pillar pension system and help address the “fragmentation of the market for retirement savings”.

The comments were made in response to a European Commission (EC) consultation on retail financial services, which closed on Friday.

EFAMA is a strong supporter of actions to deepen the European single market for retail financial products and services, and argued for replicating the success of UCITS investment funds in the area of personal pensions.

Peter de Proft, director general at EFAMA, said: “We feel very strongly about the need to address the current fragmentation of the market for retirement savings.”

The creation of a PEPP, as proposed by the European Insurance and Occupational Pensions Authority (EIOPA), would help “foster portability and economies of scale to lower costs and generate better returns to consumers, as well as enhance transparency, competition and innovation”, he said.

The association also argued that a PEPP would “strengthen the three-pillar pension system in place in Europe and diversify the risks inherent to the three pillars”.

“Along with occupational pensions,” it added, “personal pension savings can help reduce the pension gap and contribute to the objective of achieving an adequate and sustainable retirement income for EU citizens in the future.”

It acknowledged, however, that consumer interest in PEPPs would probably be limited without EU member state incentives, such as on tax.

Without these, “the PEPP would probably only attract the financially savvy”, said EFAMA.

The aim, according to the association, should not be to harmonise all types of existing personal pension products in Europe but rather to create “an EU regulation that establishes a simple, highly standardised, cost-effective and trustworthy product that could be offered across Europe thanks to an EU passport”.

EIOPA earlier this year published its final advice on the development of a so-called 2nd regime for PEPPs, arguing in favour of a standardised PEPP rather than harmonising existing directives.

It launched a consultation on its proposals and is due to deliver its advice to the EC later this year.

The EC is still to decide whether to pursue the creation of a PEPP.

Jung Duk Lichtenberger, deputy head of the Capital Markets Union unit within the Directorate-General for Financial Stability, Financial Services and Capital Markets Union, recently said the commission wanted to have “an informed view” by year-end on whether to continue with the development of a PEPP.

EFAMA has recommended a separate EU legal framework for a standardised PEPP, which would be used on a voluntary, opt-in basis.

This would help “overcome the differences in legislation between member states while respecting their existing framework for local pension products”, according to the association.

It recommended a regulatory regime similar to that for European Long-Term Investment Funds (ELTIFs).

It also backed EIOPA’s idea to create a centralised EU register, where national authorities would indicate the PEPPs they have authorised. 

The Dutch government and the Dutch and German pension fund associations have previously criticised proposals for a pan-European personal pension product.