Commission consults on need for EU personal pension framework

Creating an EU market for personal pensions is part of the Commission's plans for a Capital Markets Union across the EU, it said.   

The consultation paper asks private individuals, consumer organisations and other interested parties for feedback on their expectations of an EU framework. Questions cover how personal pensions can complement other retirement income, and how the EU can make people more confident about using these products to save for retirement.

Pensions expert Tom Barton of Pinsent Masons, the law firm behind Out-Law.com said: "The timing of this is interesting, given that Brexit could carve one of the largest markets out of the equation. But it is hard to argue with the objective of mobilising capital and creating opportunities for investors and savers."

The terminology used in the consultation document "highlights what a confused system we have in place at the moment," said Barton.

"The consultation document seems to focus on private personal pension schemes, rather than workplace personal pension schemes. It also assumes that occupational pension schemes, which would generally include one-person small self-administered scheme arrangements, are very much part of 'workplace' when in fact recent case law has demonstrated such schemes need have no meaningful link with an employer," he said.

"The consultation will therefore need to cut through quite a lot of technicality and jargon if it is to make sense in relation to our present pensions system where personal can mean workplace and occupational can mean private," Barton said.

The consultation builds on previous consultations launched by both the Commission and European Insurance and Occupational Pensions Authority (EIOPA) on personal pensions, the Commission said.

EIOPA asked for feedback from the insurance and pensions sectors, plus the asset management industry, last November on the idea of a pan-European pension product (PEPP) and how this could be offered.

EIOPA's ambition, it said, is to create a "simple, trustworthy, standardised and fully transparent PEPP in the format of a long-term retirement savings product". This would reduce costs and provide better returns to consumers by increasing economies of scale, it said.

The current public consultation is open until 31 October 2016.