According to the note, a number of delegates oppose the involvement of IORPs while others have indicated their exclusion would “not be acceptable”.
In a compromise drafted by the European presidency “only those IORPs which are authorised in each jurisdiction and supervised to provide personal pension products and whose assets and liabilities corresponding to Pepp provision business are ring-fenced would be allowed to provide Pepps”.
The Dutch, in particular, fear IORPs will dominate the market for Pepps.
The EC presidency believes that “this compromise proposal is well balanced and takes into account the different organisational structures of IORPs and their supervision in the different member states”.
The package will now go to the European Parliament, despite the Netherlands having a “parliamentary scrutiny reservation”.
The parliament’s economic and monetary affairs committee will then vote on the proposals in July before the whole parliament votes in September.
Elephant in the room
The Pan European Trade Association for Financial Advisers (Fecif) recently founded a European Pensions Institute (Fepi) to lobby and inform advisers of the progress of Pepps.
Fepi secretary general Simon Colboc said he felt the involvement of IORPs was a “red herring”.
“There is a lot of work being done on the Pepp at a parliamentary and council level,” he told International Adviser.
“IORPs are involved now but I would be surprised to see them making a big impact on Pepp.
“The biggest question facing Pepps is the tax treatment it will receive and that is the main question people are asking and it is the elephant in the room.”
Proof of the pudding will be in the eating
Chris Lean an adviser with Aisa International said he was concerned about the uncertainty of access for Britons in Europe as well as tax harmonisation.
“I cannot see any mention of tax harmonisation for savers into this product from differing countries in the proposals, an issue that came up with the initial proposals,” he told International Adviser.
“Nevertheless, with a modern mobile EU workforce there must surely be a demand for such a product that will simplify pension savings, without the need to consolidate and change product as people move to a new country.
“Standard rules on transparency should broaden its appeal and, given the potential size of the market, competition should drive down the costs for investors.
“Ultimately, the proof of the pudding will be in the eating and there will surely be a ‘snag list’ that appears after launch that will require additional consultation and inevitable changes,” Lean said.