It is estimated that only around 28% of the EU’s 243 million citizens aged 25 to 59 years are currently saving into a pension. The European Commission considers that offering an alternative form of pensions vehicle will drive a change in behaviour. To this end, on 29 June, the European Commission proposed Regulations setting out a framework for a bold new pan-European personal pension product (PEPP). This emerges as part of the EU’s 2015 Action Plan on Building a Capital Markets Union (CMU) and is expected to grow the personal pension market to €2.1 trillion by 2030. The Regulations will now be considered by the European Parliament and the European Council with PEPPs expected to start appearing in the market some two years after the Regulations come into effect.

Brexit – In or Out?
The UK’s imminent exit from the EU leaves some uncertainty about the impact that PEPPs will have on the UK pensions market and on capital flows. The Commission has indicated that those UK PEPP providers that have established themselves or a subsidiary in the EU27 prior to Brexit, and gained authorisation as PEPP providers, will be able to offer the product after the UK’s exit from the EU. However, precisely how the regime will work in practice, for example, in relation to porting a PEPP into or out of the UK, is not yet clear and will depend on the detailed outcome of Brexit negotiations.

The Commission is progressing with its project to create a new EU-wide regulatory framework that will enable personal pension products to be offered across Member States. The proposed Regulations build on one of several options presented in the Commission’s paper, which was consulted on from July to October 2016.

Read full news here: National Law Review