Europe is getting old. Ageing population is a luxury good hardly any country can afford. It has been one of the main policy challenges in the Union. Increasing old-age dependency ratio will widen the pension gap and make current pension systems unsustainable. Over the past decades, politicians have been in a rambling quest to close the gap. Their confidence in finding a solution must have been restored after the Commission Vice-President Valdis Dombrovskis announced the so-called pan-European Personal Pension Product. Member States should utilize this opportunity to continue tackling ageing population as a pan-European pension would underpin three socio-economic and institutional developments in the Union: pension system reform at national level, fiscal and macroeconomic policy coordination, and deeper economic integration.

The pan-European Personal Pension is conceived as a voluntary, personal pension scheme that would provide a fresh option to save for retirement. It will not substitute existing schemes, but will complement them. The rationales behind the idea is to create affordable options for pension providers to spread their services across the Union, to unlock capital for long-term investment and to contribute to the narrowing of the pension gap. The idea should be in place by the end of 2019.

Portability and cost-efficiency are the main advantages of the pan-European Pension in the context of free movement of labour and retirement saving. A saver moving within the Union will, during his working lifetime, accumulate retirement funds in multiple (national) compartments each complying with the rules of the member state in which they currently work. The pan-European Pension enables costless continuation of “topping up” the exact same personal pension plan when a saver changes his/her country of employment/residence. The pension providers (e.g. insurance companies, banks, investment firms etc.) will invest the funds in low-risk ventures. The so-called default investment option, which at least recovers the initial capital, will be the most common one offered to savers. Anyone employed, unemployed or in education can start participating in the pan-Pension scheme. The European Insurance and Occupational Pensions Authority (IOPA) will be the body in charge of authorizing pan-Pension product.

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