Introduction

On 29 June 2017, the European Commission proposed a framework for a pan-European personal pension product (PEPP). This framework aimed to offer EU citizens a value-for-money option to acquire an income after retirement. Furthermore, the PEPP could help in meeting the objectives of the capital markets union (CMU), by increasing voluntary pension savings, aiding savers by expanding the available market of personal pension products and by enabling providers to offer products to a larger customer base.

The PEPP is a one-of-a-kind initiative within the CMU package. While most European legislation governing pensions is aimed at establishing requirements for pension providers, the PEPP creates a ‘label’, guaranteeing the quality of certain features of the product itself. It may be argued that the PEPP is more of a retail finance product than a classic ‘pension’ product as such. If the PEPP turns out to be a success, more European labels for financial retail products may follow, such as mortgages or second pillar pension products.

Despite the freedom of services and capital, no pan-European personal pension product is readily available for consumers. One of the key features of the PEPP is that it is a portable product, in which savers can continue to contribute after moving from one Member State to another, thus preventing the obligation to purchase a new personal pension every time a consumer changes residence between Member States.

However, considering that only 3.7% of the working population of the EU is considered a mobile worker, the added value of the PEPP may be especially prevalent in Member States without well-developed multi-pillar pension systems.

Therefore, the aim of the PEPP proposal is twofold:

• – To provide mobile citizens with an easy-to-acquire portable pension

• – To make available safe personal pension products that consumers trust, in markets where no products are available or trusted

The PEPP will be a voluntary and supplementary pension product and is often qualified as a third pillar product. This means that it will not or should not change the national pension systems, nor interfere with any existing systems, such as mandatory occupational systems, as exist in the Netherlands