As the European Commission undertakes its Targeted Consultation on Supplementary Pensions, both the European Fund and Asset Management Association (EFAMA) and the European Insurance and Occupational Pensions Authority (EIOPA) have advanced detailed, future-oriented proposals, highlighting the urgent need for reform across the European Union’s supplementary pensions framework.
EFAMA “welcomes the European Commission’s Call for Evidence on Supplementary Pensions and supports the Savings and Investments Union’s goals to develop supplementary pensions and to provide savers with adequate retirement investment opportunities”.
The Association’s stance is grounded in the belief that pension reforms should cultivate a more vibrant market for providers, increase consumer choice, and deliver sustainable retirement outcomes.
EFAMA is particularly vocal about the Pan-European Personal Pension Product (PEPP), arguing that there is a greater chance potential providers will offer the PEPP if “providers must establish a sustainable business model that keeps production, distribution, advice, and administration costs low enough to ensure the PEPP remains competitive – both overall and compared to existing personal pension products”.
EFAMA’s roadmap to success includes supply- and demand-side measures: most notably, simplifying the PEPP regulation, relaxing mandatory advice for Basic PEPP, reviewing strict life-cycle investment rules, and – crucially – removing the 1% fee cap.
On this, EFAMA is unequivocal: “The focus should not be on the absolute level of costs, per se, but rather on whether a PEPP offers value for money.”
The Association also strongly supports equal tax treatment for PEPPs against national personal pensions “Member states can either contribute to the PEPP’s success or jeopardise it through a differentiated and discriminatory tax treatment.”
In parallel, EIOPA’s technical input to the European Commission emphasises the dimension of robust consumer protection and regulatory clarity as central to closing European pension gaps.
“In an ageing European society, viable and scalable supplementary pensions are urgently needed to complement statutory pensions and address the pension gaps,” the Authority noted.
EIOPA’s proposals centre on adapting both the IORP II Directive and PEPP Regulation to introduce value-for-money metrics, a more risk-based approach to investment, and a clearer EU-wide pension “label”, suggesting a rebrand of the PEPP as ‘EuroPension’ to raise profile and facilitate retail investment.
“With an ageing population in the EU, we need to take bold actions, at scale, to strengthen retirement security and reduce pension gaps”
Petra Hielkema, EIOPA’s chair
The Authority pushes for “auto-enrolment system and enhanced supervision” while also proposing that “the focus should not be on the absolute level of costs but whether a PEPP offers value for money”.
Both institutions converge on a vision of broadening coverage, scaling up occupational and personal pension provision, and simplifying regulatory hurdles to foster innovation.
“With an ageing population in the EU, we need to take bold actions, at scale, to strengthen retirement security and reduce pension gaps,” said EIOPA’s chair Petra Hielkema.
Similarly, EFAMA’s analysis warned that overregulation and cost constraints “may have appeared to be a consumer-friendly measure, but in practice, it has deterred all but one potential provider across the EU from developing a sustainable business model capable of covering the costs associated with creating and offering a PEPP”.
As the consultation progresses, it is clear that, while EFAMA and EIOPA represent different vantage points – industry and supervision – they are aligned in calling for urgent, pragmatic changes to secure the future of supplementary pensions in Europe.
Last week, the Association of European Paritarian Institutions (AEIP) warned that broadening IORP II rules to capture all “pension-like institutions” could result in regulatory overreach and impact on the functioning of social protection systems.
Read the digital edition of IPE’s latest magazine
No comments yet