MEPs approved creating a European market for additional personal pensions to increase investment choices for retail clients and provide a safe way to boost their retirement savings.
With their Monday vote MEPs aim at providing a safe, cost-friendly long term retirement savings product. The Pan-European Personal Pension Product (PEPP) would be portable cross-borders in the EU therefore better adjusted to a globalised economy with open borders and labour mobility.
PEPP portability and switching
After being authorised by the European Insurance and Occupational Pensions Authority(EIOPA) a PEPP could be manufactured and distributed in the EU.In order to find better conditions for their investments, thus also stimulating the competition among PEPP providers, PEPP savers would have the right to switch providers through a clear, low-cost, quick and safe procedure.
MEPs introduced the Basic PEPP to be a default investment option, a simple, safe and cost effective product that could be easily acquired, including through digital channels in each Member State. The Basic PEPP should allow a saver to recoup the capital and its overall costs and fees should not exceed 1% of the accumulated capital per annum.
Before signing a contract a future PEPP saver would be given an accurate, fair and clear key information document providing information consistent with any binding contractual documents and with the terms and conditions of the PEPP. Moreover, a PEPP provider or distributor would offer an obligatory personalised advice so as any contract proposed would be consistent with the PEPP savers’ retirement demands and needs including their ability to bear losses.
The final shape of the text adopted with 29 votes to 10 and 17 abstentions will be subject to the upcoming negotiations between the European Parliament, the Austrian Presidency and the Commission.