Germany’s occupational pensions association has come out against the introduction of a pan-European personal pension product (PEPP) in feedback to the European Commission (EC), while PensionsEurope has said it could have a role to play.

The EC’s consultation on a potential EU framework for personal pensions closed on Monday.

Creating a pan-European third-pillar product is one of the options on which it invited comments, and is the approach recommended by the European Insurance and Occupational Pensions Authority (EIOPA).

The aba, Germany’s pensions association, said it registered its opposition to the introduction of a PEPP in its response to the consultation.

It said a sustainable retirement income policy should be based mainly on expanding workplace pension provision rather than on private pension products.

This view has been expressed in the Netherlands, including by the government in its recent comment on the EC consultation, although the Dutch pensions association has softened its position.

Germany’s aba said occupational pensions should be “the first choice” when it came to supplementary retirement income.

“They can be organised at a collective level, are often good value for money, can balance security against returns and are governed primarily by social and labour law,” it said.

The German association said it was against EU-wide harmonisation of personal pension regulation but also against the introduction of a so-called second regime in the form of a pan-European personal pension product (PEPP).

It said this would strengthen an individualised – rather than a collective – approach to pensions, and risk undermining existing, efficient systems in operation in EU countries.

“Pensions firmly fall in the remit of the EU member states,” it added.

PensionsEurope, however, welcomed the Commission’s personal pensions initiative and agreed that a PEPP could have a positive role to play.

“PensionsEurope believes a standardised pan-European personal pension product regulated by a second regime – with a defined set of flexible elements – could contribute to the policy objectives of ensuring of high minimum standard of consumer protection,” it said.

“It appears as a much more feasible way and would promise superior outcomes than harmonising regimes.”

An EU personal pensions “initiative” could be particularly useful as a model for those member states that do not yet have a developed complementary pension savings system, according to the association.

It could also be beneficial in more developed pension markets by helping to “enhance the quality of products” there, it said.

“A supportive tax treatment is essential for the attractiveness of personal pension products compared with other saving products available at national level,” PensionsEurope said. 

It added that the Commission’s third-pillar pensions initiative “must respect the exclusive competence of the member states in the field of taxation and of statutory public pensions”.

Insurance companies manage around 90% of personal pension assets in the EU, according to the Commission’s consultation document.

The European insurance industry association has backed the PEPP initiative but believes the EC’s plan is poorly designed.