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New pan-European personal pension

26 September 2017

During the summer, the European commission launched a proposal to create a pan-European personal pension (PEPP). This is intended to be a standardised pension product available in all EU Member States. As with most personal pensions, there will be a large number of possible providers from insurance companies and banks to occupational pension funds, investment firms and asset managers.


Rather than seeking to harmonise national personal pension regimes across the EU, the realistic aim for the PEPP is for the regime to operate alongside all private and state pension schemes and existing occupational and national personal pensions. The PEPP is intended to offer pension savers:

  • A safe default option for pension investment (which guarantees pension savers will get back at least the capital they invested), while allowing four wide investment options

  • The right to switch providers (both domestically and cross-border) at a capped cost every five years

  • A number of different options for taking pension benefits

  • The same tax treatment as national pension schemes in the country in which it is used (even if the PEPP does not fully match the national criteria for tax relief)

  • Strong information requirements and distribution rules.


By creating a common standard, the intention is to allow providers to develop PEPP products that will automatically be compliant in all EU member states allowing the pooling of pension funds across borders and create significant economies of scale.


The PEPP proposal is just one element of the EU’s review of the Capital Market Union - intended to create a single market for capital in the EU. While it may take some years for the PEPP products to emerge (likely to be after Brexit), employers with employees based across the EU may eventually find it helpful for those employees to have access to identical pension arrangements no matter where they are based in the EU. It will make cross-border transfers and assignments easier to manage.


Employer Essentials Index