Investigating the failure of the Pan-European Personal Pension Product (PEPP) should be high up the agenda for European Union decision-makers during the next EU political cycle, according to PensionsEurope.

Adding its voice to that of other experts on what the pension priorities should be for the new European Parliament and the new European Commission, the industry association said “Europe’s pension landscape is at a critical juncture”.

“As we move towards 2029, the aging demographic, economic uncertainty, and changing work patterns require an updated approach to pensions,” it said.

According to PensionsEurope, key principles to be heeded include increasing coverage, closing gaps and providing good outcomes.

Those who do not have access to occupational pensions, for example, required viable alternatives to save for retirement but the launch of the PEPP has so far “been a failure” and the EU needs to take corrective action.

“Effective” strategies should be adopted to boost occupational pensions coverage, such as compulsory participation, auto-enrolment, attractive tax incentives and improved financial literacy, said PensionsEurope.

On personal pensions, the European Commission and Parliament should explore “a bottom-up approach” by looking at existing national personal pension products and fostering best practices among member states to enhance the development of funded pensions.

Pension funds ‘incorrectly framed’

PensionsEurope also set out the unique role of pension funds, which it said are “increasingly and incorrectly framed by EU legislation as providing products sold to consumers or customers”.

The industry association and some national pension fund bodies have been trying to get the European Commission to recognise the particularities of pension funds instead of including them undifferentiatedly within the scope of horizontal regulation – legislation on a specific theme covering different sectors or players.

For example, there is a need for sub-sectoral specific rules within the Sustainable Finance Disclosure Regulation tailored to the specificities of pension funds and their different structures in member states, they have argued.

Meanwhile, on IORP II, PensionsEurope said the revision of the EU pension fund legislation will take up a significant part of the next political cycle and it is therefore “essential to ensure the new legislation remains effective for years to come”.

“Minimum harmonisation provides the flexibility needed for adaptation amidst changing circumstances,” it added.

PensionsEurope also called for “a good balance between member states’ policies and European policies, ensuring pension funds benefit more from the Single Market”.

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