6. Third pillar: personal pensions


Commission publishes PEPP Consultation

On 27 July the European Commission published the expected Consultation regarding the PEPP (Capital Markets Union: Action on a potential EU personal pension framework). The consultation has three parts: the first part is addressed to private individuals (personal pension holders and potential customers of such products); the second part is addressed to consumer organisations representing existing or future consumers, and the third part is addressed to stakeholders in a wider sense, such as for example the aba.

The deadline for response is 31 October 2016.


EIOPA’s advice on the development of a Single Market for personal pension products

On 06 July EIOPA published its advice on the development of an EU Single Market for personal pension products (PPP).The paper, which only marginally differs from the consultation paper published in February 2016, continues to argue for a Second Regime (“PEPP“) and against the harmonisation of existing directives and regulations.

It is expected that the Commission will now publish its own consultation before deciding how to proceed in this area.


aba position paper: key social policy decisions must be taken at the national level

The aba has published a position paper (only available in German) criticising EIOPA’s approach. The paper stresses the following two points:

  • Population aging calls for a sustainable pension policy including a strong second occupational pillar, rather than individualised personal pensions. The aba is therefore both against harmonisation of existing rules as well as a Second Regime taking the form of a “PEPP”.
  • The success of a potential PEPP is closely linked to tax framework in which it will operate. As has been the case in the past, decisions regarding the overall pension system, the role of the different pillars and what the tax framework looks like can only be decided at the national level. The EU Commission and EIOPA need to respect this prerogative of the Member States.


aba response to EIOPA’s third Consultation on the PEPP

As in previous consultation responses regarding the Pan-European Personal Pension Product (PEPP), the aba criticises the focus on new product regulation and calls for a recognition of occupational pensions as a tried and tested form of funded retirement provision.

The response first makes a number of general remarks, before responding to the rather detailed questions of the consultation. The aba reiterates its criticism that the PEPP is not well defined and that from the German perspective it is rather an individual savings product than a pension. The aba calls for a focus on occupational pensions and emphasises the importance the tax framework has for any kind of voluntary retirement provision. In addition, the aba criticises EIOPA’s evidence base (Annex III): while Germany is identified as the biggest market for individual pension products, no German data is included in the presented overview.

The responses to this consultation will be taken into account in EIOPA’s Advice to the Commission. The Commission plans to conduct their own additional consultation regarding the PEPP and will then decide how to proceed.


EIOPA advocates a Second Regime

At the end of February 2014 EIOPA published the preliminary report “Towards an EU single market for personal pensions”. The Report discusses two options to strengthen the single market for personal pensions: stronger harmonisation of the existing products and the introducing of a Second Regime, which would run alongside the existing national systems.

The preliminary Report to the European Commission advocates a proposal for a Directive to raise minimum consumer protection for the existing products within the third pillar, and in addition advocates a Regulation which would establish a Second Regime. This Regulation would introduce a new and highly standardised third pillar product.

However, these suggestions do not solve the main obstacles a single market faces: the differences between tax and social law across the different Member States. EIOPA recognises that it does not have any competences in this area (the Member States are responsible in this area). The final Report will therefore not look at questions around taxation.

Together with the preliminary Report EIOPA published a Summary of Comments on the EIOPA Discussion Paper and a letter to Jonathan Faull, DG Internal Market and Services. It is expected that towards the end of 2014 the Commission will send a detailed Call for Advice to EIOPA. EIOPA then has 18 months to respond to the Call for Advice.

PensionsEurope has published a position paper on personal pensions at the beginning of March 2014.


aba response to EIOPA consultation

The aba has submitted a response to the EIOPA consultation on a possible EU-single market for personal pension products. The document is available both in English and in German.

While the aba recognises the role of personal pensions, we would like to emphasise the following general points:  

  • Demographic developments paired with cuts in state pension provision create the need to supplement statutory retirement income by private pensions. The first choice in this regard are occupational pensions.
  • Most providers of Personal Pension products (PPP) are already regulated, mainly by EU Directives. EIOPA should identify those providers, who currently are not covered under any EU Directive and work to close these gaps. The aba argues against any additional product regulation on EU level which would include a range of different providers.
  • In practice any obstacles are primarily related to the different requirements regarding the tax treatment of contributions to private pensions in the Member States. This is not a question of prudential regulation to which EIOPA could provide a solution.
  • It is neither sensible to aggregate the broad range of PPP as discussed in the EIOPA paper, nor to create a common EU framework for those products.
  • The aba argues against a Second Regime and instead calls for the further development of the tried and tested systems of the second pillar.

PensionsEurope, our European umbrella organisation, has also submitted a response.


EIOPA publishes discussion paper on Personal Pension Products

In May 2013 EIOPA has published a Discussion paper on a possible EU-single market for personal pension products containing 71 questions. The consultation addresses the question of defining personal pension products, but also includes questions on cross-border supply and a possible Second Regime as well as EU regulation across providers of personal pension products.

In Germany the Riesterrente and the Basisrente as well as capital life insurance products and annuity products are covered under the term personal pension products.


EIOPA asked by Commision to deliver technical advice for an „EU Single Market for personal pension schemes“

In July 2012 the European Commission asked EIOPA for technical advice on the development of an EU Single Market for personal pension schemes. The letter by Jonathan Faull addresses personal pensions products not subject to the IORP Directive. However, the Commission states that “it is very important that personal pension schemes are considered in close connection with occupational pension schemes because the borderline between personal and occupational pensions is often blurred.” 






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