While the advice industry has been supportive of the principles some have called the Pepp’s design unworkable – including the Association of International Life Offices.
However, Fecif committee member and Pepp expert Simon Colboc has been pleased with the progress the Pepp has made.
“Back in 2016 the Pepp was pretty useless,” he said.
“It was all the product of some false ideas with everything centralised and automated – a very much ‘nanny knows best’ approach, which to us as advisers was not what we wanted to see. It wasn’t going to cut it.
“However, for fear of sounding naive, what we have seen since then has been fantastic – they have made a lot of progress.”
Colboc now identifies two key outstanding challenges for the Pepp to make it off the drawing board.
He would like to see the unwieldy 20 compartment tax system rationalised into potentially two – an accumulation and decumulation phase each taxed according to the local jurisdiction.
As it stands the Pepp is effectively 20 products with a ribbon around them, which distributors don’t want according to Colboc, and attempts to strong arm tax authorities into one policy on Pepp won’t work.
Another key question is the design of the investment proposition. Should it follow the UK model or the continental model favoured by insurers with a guaranteed outcome?
“It is hard to say if it will make it into law,” he said. “It depends if it either becomes too wishy washy or if they get bogged down in the details like the country by country compartment tax treatment.”
Despite these “defining decisions” still ahead Colboc is hopeful the Pepp can make it into law before the European Parliament term ends in the summer.