Following widespread research and feedback, the association has produced a blueprint which it hopes will guide the European Insurance and Occupational Pensions Authority (EIOPA) as it works to create a standardised EU-pension product.
The product would be a European brand of pension which is designed to overcome what the European Fund and Asset Management Association (EFAMA) said is a “fragmented” European pensions market. The product would need to meet certain standards and be distributed throughout Europe for EU passport-holders.
Feedback around the European personal pension (EPP) concept was generally positive, with 100% of asset management firms wanting to take part as providers, and a third also wishing to act as distributors.
EFAMA’s recommendations include:
- Ensuring there are sufficient product rules in place so that providers offer the same EPP throughout Europe
- An appropriate investment default option should be on offer for those who are unable to choose
- Information about the different EPPs, including risk-reward indicators, should be given to potential EPP holders so they can compare and make the right choice
- An EU framework should be developed for a standardised EPP to reduce distribution costs and encourage more consumers to save for retirement
Introducing a cross-border EU pension product – otherwise known as an Officially Certified European Retirement Plan (OCERP) – would enhance the choice between types of products and providers, said EFAMA.
The association also highlighted that a single market for personal pensions would simplify and improve the portability of pension savings, therefore benefiting the increasing number of people moving abroad.
This news comes after the European Commission announced its plan to create a capital markets union (CMU), which would hope to create a single market across the 28 member states in order to improve cross-border investment and therefore boost the European economy.
“By removing barriers for cross-border flows of pension savings, the creation of a European personal pension would contribute to a well-functioning CMU and enhance the flow of capital to long-term investment projects,” said EFAMA.
Peter De Proft, director general of EFAMA, said the EPP initiative and the EU passport for cross-border selling both hold “significant promises” for the CMU project and could stimulate jobs, growth and retirement savings in Europe.
“EFAMA is eager and well-placed to participate in such an ambitious project,” said Proft. “We believe our industry has a crucial role to play in this initiative which has the potential to significantly improve the well-being of European citizens.”