The Dutch Pensions Federation has criticised a proposal by the European Insurance and Occupational Pensions Authority (EIOPA) for a pan-European personal pensions product (PEPP).
Responding to EIOPA’s consultation on the introduction of a standard, cross-border, third-pillar product, the industry organisation argued that demand for such plans would come only from the “happy few”, and fail to encourage workers to save more for pensions.
Germany’s pension fund association (aba) was also critical of EIOPA’s proposal, describing it as “unconvincing” and arguing that many questions “remained unanswered”.
EIOPA, at the European Commission’s request, is exploring the possibility of a standard third-pillar scheme.
PGGM, asset manager for Dutch healthcare pension fund PFZW, and Robeco recently threw their support behind the concept of a standard cross-border plan.
According to the Dutch Pensions Federation, however, EIOPA’s plan would create an “uneven playing field” between EU-regulated providers and IORPs providing occupational pension schemes.
It said the European Commission should focus instead on second-pillar pensions, which encourage “solidarity, risk-sharing and the participation of all participants in governance”.
This, it said, has “clear advantages” over purely commercial products, which “place risk and the drive for accrual with the consumer”.
The aba agreed, arguing that “we need more funded pensions in Europe but with the focus on occupational pensions”, as this pillar offered “good value for money”.
It said existing systems should be “further developed and enhanced” before new systems were set up.
The Dutch Pensions Federation expressed concerns that cross-border product providers would be unable to offer sufficient service locally.
“It would be difficult for a Danish provider of a PEPP to advise a participant in Italy correctly about how to deal with his pension rights during a divorce, unless the provider has a local subsidiary,” it said
It said EIOPA put too much emphasis on pension products’ accrual phase, when the payment phase was “crucial for the quality of the product”.
The aba, meanwhile, highlighted the challenge of pinning down the term ‘pensions’, on which “an EU consensus has not yet been reached”.
This will cause taxation problems, as “equal tax treatment for different quality requirements may not appear justifiable by all member states”.
It added that an equal tax treatment for products of the same quality “already exists in Germany”.