1142

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Pan-European pension product

21-03-2018

This European added value assessment, prepared for the European Parliament's Committee on Economic and Monetary Affairs (ECON), analyses the added value of a pan-European pension product, in particular from the taxation viewpoint. It presents the issues that led to the PEPP proposal being made and provides a short overview of key stakeholders' opinions and existing studies. Moreover it considers the question of PEPP taxation and the impact of costs on final pensions. The analysis concludes by identifying ...

This European added value assessment, prepared for the European Parliament's Committee on Economic and Monetary Affairs (ECON), analyses the added value of a pan-European pension product, in particular from the taxation viewpoint. It presents the issues that led to the PEPP proposal being made and provides a short overview of key stakeholders' opinions and existing studies. Moreover it considers the question of PEPP taxation and the impact of costs on final pensions. The analysis concludes by identifying the potential European added value that could be achieved by means of the PEPP proposal.

Framework for a pan-European personal pension product (PEPP)

21-11-2018

Europe’s population is ageing, due to people living longer and having fewer children, putting pressure on pension systems and leading to reforms to make public pensions more sustainable – and often less generous – in future. To support retirement incomes, the European Commission’s 2012 pensions white paper called for more opportunities for citizens to save in safe and good-value complementary pensions. The proposed framework for a pan-European personal pension product (PEPP) aims to encourage the ...

Europe’s population is ageing, due to people living longer and having fewer children, putting pressure on pension systems and leading to reforms to make public pensions more sustainable – and often less generous – in future. To support retirement incomes, the European Commission’s 2012 pensions white paper called for more opportunities for citizens to save in safe and good-value complementary pensions. The proposed framework for a pan-European personal pension product (PEPP) aims to encourage the development of personal pensions (that is, voluntary, individually funded pensions) in Europe, to support retirement saving and strengthen the single market for capital by making more funds available for investment. Generally the proposal is considered a welcome extra option to support retirement savings and investment. However differing national pension systems and tax treatments are noted as challenges, although the Commission has also issued a tax recommendation. Council agreed a general approach on 19 June 2018 and the ECON committee voted its report and negotiating mandate on 3 September, hence trilogues have started. Second edition. The ‘EU Legislation in Progress’ briefings are updated at key stages throughout the legislative procedure. Please note this document has been designed for on-line viewing.

The Gender Pension Gap: Differences between Mothers and Women without Children

15-07-2016

This study was commissioned by the European Parliament's Policy Department for Citizens' Rights and Constitutional Affairs at the request of the FEMM Committee. Demographic trends and the financial and economic crisis have obliged European countries to accelerate the revision of their pension systems with the aim of ensuring their sustainability. However, serious question on the effects these reforms on pension adequacy have been raised. This report summarises recent changes in pension reforms and ...

This study was commissioned by the European Parliament's Policy Department for Citizens' Rights and Constitutional Affairs at the request of the FEMM Committee. Demographic trends and the financial and economic crisis have obliged European countries to accelerate the revision of their pension systems with the aim of ensuring their sustainability. However, serious question on the effects these reforms on pension adequacy have been raised. This report summarises recent changes in pension reforms and their effects on gender pension gaps, with a focus on women with children. The assessment of recent pension reforms in a gender perspective shows that changes in pension design may increase the gender gap in pensions and translate into higher poverty risks for older women compared to men, unless specific measures are implemented in Member States to support women’s position in the labour market and to address periods out of the labour market due to caring duties.

External author

Manuela Samek

Pan-European Personal Pension Product

27-10-2017

This note seeks to provide an initial analysis of the strengths and weaknesses of the European Commission's impact assessment (IA) accompanying the above proposal, adopted on 29 June 2017 and referred to Parliament’s Committee on Economic and Monetary Affairs (ECON). Pension systems across the EU vary considerably. While state-based public pensions constitute the most important part of retirement income, they may be complemented by occupational pensions and/or (national) personal pensions (private ...

This note seeks to provide an initial analysis of the strengths and weaknesses of the European Commission's impact assessment (IA) accompanying the above proposal, adopted on 29 June 2017 and referred to Parliament’s Committee on Economic and Monetary Affairs (ECON). Pension systems across the EU vary considerably. While state-based public pensions constitute the most important part of retirement income, they may be complemented by occupational pensions and/or (national) personal pensions (private pension savings by households) (IA, pp. 4-5). The IA observes that although demographic change and limited public budgets increase the pressure on public pension systems and their adequacy, currently only 27 % of the EU population between 25 and 59 years old, representing 13 % of the total EU population, invest in personal pensions (IA, p. 11, Annex 6, pp. 97-98). Moreover, the 2015 Action Plan on a Capital Markets Union found the single market for personal pension products to be highly fragmented, due to divergent national and European rules. It concluded that this fragmentation prevented providers from developing innovative and competitive products and savers from receiving good quality, flexible and easily portable personal pensions (IA, p. 4, 9). The availability of personal pension products varies widely from Member State to Member State, and the existing offers differ considerably as regards both their accumulation (saving) and decumulation (pay-out) phases; this makes their portability difficult and leads to a generally low take-up. Against this backdrop, as announced in its mid-term review of the Capital Markets Union Action Plan, the Commission came forward in June 2017 with a legislative proposal to create a voluntary pan-European personal pension product (PEPP). The aim is to complement the existing national personal pensions and to encourage private capital investments in retirement savings on an EU scale. Given the relevance of tax incentives for personal pension products, the proposal is accompanied by a recommendation on tax treatment of such products by Member States, which is also covered by the IA under examination.

External author

Kramer, Esther

Pan-European personal pension product (PEPP)

02-04-2019

An aging population increases pressure on pension systems, and traditional pay-as-you-go pensions are likely to be less generous in the future. To increase the options for those saving for retirement, and stimulate competition on the market, the European Commission proposed a new EU framework for a voluntary personal pension product (PEPP), which would be complementary to other personal pensions and national regimes. Trilogue negotiations concluded with a compromise approved by the ECON committee ...

An aging population increases pressure on pension systems, and traditional pay-as-you-go pensions are likely to be less generous in the future. To increase the options for those saving for retirement, and stimulate competition on the market, the European Commission proposed a new EU framework for a voluntary personal pension product (PEPP), which would be complementary to other personal pensions and national regimes. Trilogue negotiations concluded with a compromise approved by the ECON committee and by the Council. The European Parliament is due to vote on the PEPP file during the April I plenary session.

Pension Schemes

14-08-2014

Large variations exist in the approach to pensions in EU member states. This Policy Department A study aims at providing the EMPL Committee with information about the risks and replacement rates of the different pension schemes. Vulnerable groups are less likely to contribute to individual plans or 'third-pillar' schemes, which complicates a shift in replacement rates from Pillars 1 (aimed at avoiding old age poverty) and 2 (occupational schemes) to Pillar 3. Pillars 1 and 2 should ensure pension ...

Large variations exist in the approach to pensions in EU member states. This Policy Department A study aims at providing the EMPL Committee with information about the risks and replacement rates of the different pension schemes. Vulnerable groups are less likely to contribute to individual plans or 'third-pillar' schemes, which complicates a shift in replacement rates from Pillars 1 (aimed at avoiding old age poverty) and 2 (occupational schemes) to Pillar 3. Pillars 1 and 2 should ensure pension adequacy, leaving Pillar 3 as a tool for individuals to enhance their replacement rates.

External author

Karel Lannoo, Mikkel Barslund, Ales Chmelar and Marten von Werder (CEPS)

Pension Systems in the EU – Contingent Liabilities and Assets in the Public and Private Sector

14-10-2011

This study provides an overview of the different pension systems across EU Member States and describes contingent liabilities and assets in the public and private sectors. Therefore, the study assesses both the recent development of the pension schemes and the current stay of play. As a result, good practices are identified and sound features commended which are to be implemented across the EU. Key elements of an adequate and sustainable pension scheme include, for example, a higher labour market ...

This study provides an overview of the different pension systems across EU Member States and describes contingent liabilities and assets in the public and private sectors. Therefore, the study assesses both the recent development of the pension schemes and the current stay of play. As a result, good practices are identified and sound features commended which are to be implemented across the EU. Key elements of an adequate and sustainable pension scheme include, for example, a higher labour market participation rate, most notably amongst older workers, a higher retirement age and an appropriate mix of pension pillars.

External author

Werner EICHHORST (IZA), Maarten GERARD (IDEA Consult), Michael J. KENDZIA (IZA), Christine MAYRHUBER (WIFO), Connie NIELSEN (NIRAS), Gerhard RÜNSTLER (WIFO) and Thomas URL (WIFO)

Demographic outlook for the European Union 2019

03-06-2019

This paper is the second in a series that EPRS is producing on the demographic outlook for the European Union (EU). Demography matters. The economy, labour market, healthcare, pensions, the environment, intergenerational fairness and election results – they are all driven by demography. The EU has seen its population grow substantially – by around a quarter since 1960 – and currently stands at over 500 million people. However, it is now beginning to stagnate, before its expected decline from around ...

This paper is the second in a series that EPRS is producing on the demographic outlook for the European Union (EU). Demography matters. The economy, labour market, healthcare, pensions, the environment, intergenerational fairness and election results – they are all driven by demography. The EU has seen its population grow substantially – by around a quarter since 1960 – and currently stands at over 500 million people. However, it is now beginning to stagnate, before its expected decline from around the middle of the century. With the world population having risen still more substantially and growth continuing, the EU represents a shrinking proportion of this population. The EU population is also ageing dramatically, as life expectancy increases and fertility rates fall below their levels in the past. This has serious implications across a range of areas including the economy, healthcare and pensions. Free movement within the EU and migration from third countries also play an important role in shaping demography in individual Member States and regions. The 'in-focus' section of this year's edition looks at pensions. It highlights that, whilst national reforms have largely successfully addressed issues around the sustainability of pension systems, concerns about the adequacy of pensions, particularly in the future, still remain.

Gender Gap in Pensions: Looking ahead

15-05-2017

The study was commissioned overseen and published by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs at the request of the FEMM Committee. The issue of gender gap in pensions has aroused increasing attention over recent years. While the current gap in pension levels between men and women reflects past labour market tendencies and design of pension systems, pronounced changes have occurred with regard to both employment of women and pension systems. The ...

The study was commissioned overseen and published by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs at the request of the FEMM Committee. The issue of gender gap in pensions has aroused increasing attention over recent years. While the current gap in pension levels between men and women reflects past labour market tendencies and design of pension systems, pronounced changes have occurred with regard to both employment of women and pension systems. The ageing population has stimulated revision to pension systems, including raising retirement age and the introduction of a closer correspondence between lifetime earnings and pension levels. These changes will influence the pattern in the future gender pension gap. This report recommends an approach to assessment of the future gender pension gap using the Forward-looking Gender Pension Gap Index. The index proposed spans two domains: the employment gap and pension system compensation. Both these domains impact tomorrow’s distribution of pensions between men and women.

External author

Agnieszka Chłoń-Domińczak, Warsaw School of Economics

European Union pension systems: Adequate and sustainable?

11-11-2015

One in four European Union (EU) citizens currently depend on their pension income. Younger citizens will one day benefit from pensions too. And they also have an immediate interest, as the taxes and social security contributions working age people pay help support current pensioners. However, pensions are one of the biggest public expenditure items in the EU and as the EU population ages due to lower birth rates and increasing longevity, pension systems have come under increasing pressure. Since ...

One in four European Union (EU) citizens currently depend on their pension income. Younger citizens will one day benefit from pensions too. And they also have an immediate interest, as the taxes and social security contributions working age people pay help support current pensioners. However, pensions are one of the biggest public expenditure items in the EU and as the EU population ages due to lower birth rates and increasing longevity, pension systems have come under increasing pressure. Since its inception in 2011, the European Semester process has resulted in a pension related Country Specific Recommendation (CSR) for a majority of Member States every year. And the 2015 Ageing Report shows there has been good progress in making pension systems more sustainable. Overall EU spending on public pensions as a percentage of GDP is now expected to be similar in 2060 to today’s level, despite demographic ageing. But pensions also need to be adequate and the recently published 2015 Pension Adequacy Report (PAR) gives a comprehensive picture of this both now and in the future. Whilst acceptable levels of adequacy have largely been maintained for current pensioners, this is not the case everywhere or for all groups (e.g. women are at greater risk of inadequate retirement income). And as the impact of pension reforms feeds through, there are some challenges to be faced if the growing numbers of future EU pensioners are to avoid poverty or large falls in their income on retirement.

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