Parliament’s economic and monetary affairs committee approved the proposals in a vote earlier this week. Parliament will now enter into negotiations with member states to get a final agreement on the legislation.
Committee members said the product will have “uniform quality standards throughout Europe” and will be offered by “private actors” as a supplement to state and occupational pension schemes.
It is claimed that its great advantage is that it will be transferable within Europe.
Under the plan, investors can also opt for more flexible PEPP variants with higher expected returns and more risk. The annual costs and fees of the basic PEPP will not be able to exceed one per cent of the annual contributions.
The vote, on Monday, will form the basis of Parliament’s position for the forthcoming negotiations with the Council and Commission.
ALDE group MEP Sophie in ‘t Veld, Parliament’s rapporteur on the file, commented after the vote, “I hope that European consumers will soon benefit from more choice when saving for retirement.
“This proposal will provide pension providers with the tools to offer a simple and innovative pan-European personal pension product, offering greater choice to consumers. Citizens will be able to relocate across borders without the need to change their pension, which will be a big step forward.”
She added, “I am delighted with the Parliament’s suggested amendments to the proposal; we have added additional protections for consumers and a specified regime for a basic pension product with very safe investment options. I look forward to fighting for Parliament’s suggestions in the coming negotiations.”
EPP group shadow rapporteur Brian Hayes said the outcome of the vote was “good news for European consumers. This will be a safe, cost-effective and reliable product with EU branding and backing. It is an additional feature of our pension landscape and will not cut across the member states' existing national pension systems.
“In Europe, we have a potential pension time bomb coming down the track. Populations are ageing and the old age dependency ratio is increasing. State pension schemes will come under more pressure in the future and that is why we need to ensure that citizens have access to additional pension products. With this proposal, people will be encouraged to put more aside for their retirement needs.”
Hayes said action was needed because “a potential pension time bomb is coming down the track. Such a pension product can be easily transferred from one member state to another. It’s the product for the new mobile workforce.”
Parliament’s S&D group, however, did not support the final agreement. Group member Pervenche Berès explained, “We recognise that by giving more importance to the inclusion of environmental, social and governance factors in investment strategies, the vote in the economic and financial affairs committee is a step forward towards making the EU economic model sustainable. However, this was not enough and this is why we did not support the final agreement.
“The text, as supported by the right-wing majority of this House, does not offer enough guarantees to savers, does not protect the long-term nature of the PEPP, and does not secure that consumers will recoup at least the invested capital they have made, this is simply not acceptable.
“For us Socialists and Democrats it is crucial that greater choice goes hand in hand with protection and transparency, both legal and economic, and first of all for the basic PEPP. To this end, we fought to have a proper definition of the capital covered and to avoid any tax loopholes that would lead to a race to the bottom. We made sure that while European citizens can buy these products everywhere in Europe, the country of residence is the criterion when defining the tax treatment of pension products.”