Response to the EC’s Public Consultation on a Potential EU Personal Pensions Framework

31 October 2016

Consultation response

Finance Watch is supportive of the European Commission’s initiative to promote the take-up of Pillar 3 retirement saving schemes across the EU by introducing a Pan-European Personal Pension Product (PEPP).

We note, however, that the introduction of PEPP as a “second regime” alongside Member States’ existing PPP offerings is, in our view, but a second-best option in the absence of a pan-European effort to harmonise national PPP regimes. We understand that this may not be politically and/or practically feasible, at least in the near term. If successful, PEPP could serve as a useful instrument to pave the way for harmonisation on a wider scale.

It is necessary to have as much clarity as possible on the intended purpose of the PEPP, in particular when compared to other, already existing forms of retirement savings and personal investment. In line with EIOPA’s definitions, Finance Watch assumes that PEPP should primarily fulfil the following criteria:


  • The product is designed to be a simple, standardised personal savings product supplementing citizens’ Pillar 1 (and 2) pension entitlements.
  • It provides an effective but low-risk option for citizens without significant personal investment experience to invest in a Pillar 3 retirement savings plan;
  • It is safe for online distribution, and does not require professional advice or constant monitoring by the client;
  • It is designed for stable income generation and favours annuity-style pay-outs over lump sum capital withdrawals.


  • The product is designed and documented in a highly standardised way:- Documentation includes Key Information Documents (KIDs) and comprehension alerts, as currently proposed for other personal investment products (PRIIPs);- Product design includes mandatory features, such as a low-risk default option, flat fee structures and harmonised minimum holding periods;


  • The product is transferable across Member State borders and between different providers. Restrictions are strictly limited and permitted only where necessary to preserve the scheme’s long‑term orientation, e.g. minimum holding periods.


  • The product provides exposure to the capital markets on a pan-European scale, unlike existing national schemes, which are often biased towards deploying retirement savings domestically.
  • It is designed to be marketed and administered in as cost-efficient a manner as possible, including online distribution, and provides full and timely disclosure of all overhead costs.


  • If the product is offered by different categories of providers, all of them meet a common minimum standard which is equivalent to the existing prudential requirements for pension providers;
  • The product is restricted to conservative, low-risk investment styles, concentrating on capital preservation and stable returns;
  • It comprises a mechanism for cushioning pay-outs against short-term volatility of capital market returns, i.e. provide for the creation of capital reserves;
  • A capital conservation guarantee, in real terms, could be considered as part of the default option.

For further questions, please contact Christian M. Stiefmueller, senior policy analyst at Finance Watch.