The scope of the EU packaged retail and insurance-based investment products (PRIIPs) regulation should not be extended to pension products, PensionsEurope has said.
The Brussels-based pension fund organisation was responding to a call for evidence from the European Supervisory Authorities (ESAs), which have been asked to provide technical advice to the European Commission.
As part of its project to create a genuine Capital Markets Union (CMU), the Commission is planning to publish a strategy for retail investments in Europe in the first half of next year, and a review of the PRIIPs regulation is also on the agenda.
One of the questions asked by the ESAs, as requested by the Commission. was whether the scope of the PRIIPs regulation should be extended to certain pension products, defined as those which, under national law are recognised as having the primary purpose of providing the investor with income in retirement and which entitle the investor to certain benefits, and individual pension products for which a financial contribution from the employer is required by national law and where the employer or the employee has no choice as to the pension product of provider.
Opposing such an extension, PensionsEurope said the PEPP methodology would be a better starting point for providing information on pension products than the PRIIPs Key Information Document (KID), with the Commission and EIOPA having deciding against the PRIIPs KID for PEPPs.
“In our view, the European Commission and EIOPA should recognise such a diversity and protect pension products’ specificities.”
It said forcing pension products into the scope of the PRIIPs regulation would result in misleading information for consumers, as retail investment products had a different investment time horizon and characteristics than pension products and the latter’s shapes and forms varied considerably between countries.
It said the PRIIPs KID did not allow for detailed information about specific rules falling under the remit of EU member states, such as the tax treatment, the retirement age, and information on the decumulation phase.
“In our view,” PensionsEurope wrote, “the European Commission and EIOPA should recognise such a diversity and protect pension products’ specificities.”
It continued: “This is key to consumers’ protection as well. The different objectives, time-horizon and characteristics of pension products when compared to retail investment products are the reasons for which in 2014 the EU legislator left up to the Member States the set-up of tailored information requirements on pensions.
“We do not believe the conditions have changed since then and we see no reason for extending the scope of PRIIPs to pension products.”
The deadline for the ESAs to provide their advice to the Commission is 30 April 2022. On 18 February they will be holding a public hearing on retail investor protection.