Insurance Europe has today published a position paper regarding the European Insurance and Occupational Pensions Authority’s (EIOPA) advice to the European Commission on the development of a pan-European personal pension product (PEPP).
While welcoming the overall aim of the PEPP, Insurance Europe warned that EIOPA’s proposals do not give proper consideration to key product features required to provide European citizens with tailored retirement solutions, and stressed that a poorly designed PEPP will bring benefits neither to consumers, nor to the EU economy.
In particular, Insurance Europe noted that for the PEPP to be a true long-term product, it must allow providers to generate long-term liabilities. This requires consumers to be incentivised to save for a long period; for instance with minimum investment periods.
In addition, Insurance Europe said that PEPP providers should be subject to an appropriate prudential treatment that takes account of the product’s long-term horizon and specific features. Insurance Europe believes that the “same risks, same rules” principle should apply to ensure a level-playing field between all providers.
Insurance Europe also pointed out that EIOPA’s advice fails to address the complex relations between a pan-European product and areas falling under national competence, adding that a thorough assessment of the impact of these issues is needed.
Finally, Insurance Europe said that the PEPP should consider aspects related to decumulation, an intrinsic aspect of pension products. National practices and rules on decumulation protection mechanisms, such as pay-out and annuities, and survivor’s/death benefits should be duly considered.