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Have pension, will travel

EU citizens can move about freely within the Schengen area. But taking your pension with you when you relocate to another country is almost impossible. Help might now be around the corner.

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Gabriel Bernardino, Chairman of the European Insurance and Occupational Pensions Authority (EIOPA)


EU politicians are currently discussing the creation of a uniform personal pension product, one that is more up to date and flexible, offers people greater control over their financial future and removes the obstacles in the way of long-term saving. As part of a public consultation on a potential European framework for personal pensions, the EU is collecting statements from private individuals and stakeholders until the end of October 2016. Reason enough to sit down for a chat with the Chairman of the European Insurance and Occupational Pensions Authority (EIOPA), Gabriel Bernardino.

What does a uniform European personal pension product have to offer EU citizens?
Many people do not have the opportunity to reasonably save for their future retirement as there is no market for complementary pension products, be they occupational or personal.

Personal pension products have the potential to close the significant savings gap for European individuals’ retirement income. Standardised, continent-wide coverage (a Pan-European Personal Pension Product, or PEPP) would be a sensible way to ensure adequate retirement provision. And this in turn would enhance opportunities for long-term investments in the Capital Markets Union.

What would a European personal pension product look like?
The PEPP should be a safe, transparent and cost-effective personal pension savings product.

To help consumers compare products, standardised information is a very important element of the PEPP. Investment options also need to be standardised and, above all, limited. A single default investment option should be defined.

"I am convinced that a standardised pan-European personal pension product can increase consumer protection, transparency and pension savings to ultimately improve outcomes for European citizens."
"The situation now is that there are either no occupational pensions or insufficient ones in a number of EU countries, and the level of state pension does not provide adequate retirement income."

What are the greatest challenges to the launch of PEPP?
The biggest challenge is the heterogeneous nature of the pension landscape in Europe. The roles of public, occupational and personal pension vehicles in each of the 28 EU member states diverge significantly. Pensions tend to be embedded in national social and labour law and have various approaches to tax treatment. Some countries have strong occupational pensions, while others have built up personal pensions. Quite a number of countries have yet to develop strong complementary pension systems beyond the public pay-as-you-go social security regimes.

The creation of an effective PEPP requires a constructive approach from the member states and from the various sectors offering personal provisions. We need to work closely with all relevant stakeholders to ensure that we achieve the right balance.

To what extent might the PEPP divert savings away from workplace schemes that benefit from an employer contribution?
Personal pensions should not compete against occupational and state pensions; they should complement them. The situation now is that there are either no occupational pensions or insufficient ones in a number of EU countries, and the level of state pension does not provide adequate retirement income. There is still an overall need for complementary pension savings.

Why should European the citizens entrust their savings to a PEPP?
Personal pensions will only deliver on their promise—to provide sustainable pensions and adequate replacement rates in the future—if savings are safe, cost-effective, transparent and flexible enough to accommodate the changing economic and labour market environment. What's more, PEPP will make it possible for EU citizens to conveniently take their pension with them to another member state.

I am convinced that a standardised pan-European personal pension product can increase consumer protection, transparency and pension savings to ultimately improve outcomes for European citizens.

What are EIOPA’s expectations from the consultation on the PEPP?
When considering the PEPP, EIOPA investigated the product’s potential with possible providers and stakeholders. The results showed that, due to the highly divergent market for personal pension products in the European Economic Area, a second regime product could make an important difference to the efficiency of an EU single market for personal pensions. What is pivotal is that the product be standardised yet flexible.

We expect that the findings of the European Commission’s currently ongoing public consultation will reconfirm those conclusions.