EIOPA held its third Public Event on Personal Pensions in Frankfurt on 7 September 2015. EIOPA is very pleased that more than 130 guests from all relevant sectors (including consumer representatives, the insurance, asset management, occupational pensions, and banking sectors) accepted our invitation and took the time to provide EIOPA with insights that will help EIOPA to prepare its final advice to the European Commission on the introduction of a standardised Pan-European Personal Pension product (PEPP).
The objectives of the Public Event of 7 September were, on the one hand, to provide stakeholders and other parties with an opportunity to give EIOPA the input needed to finalise its advice on the introduction of the PEPP. On the other hand, it also helped clarify the PEPP features to arrive at a common understanding of the proposal before finalising the written feedback to the consultation paper. The event also provided a great platform to exchange views on personal pension-related topics across potential providers and also with the supervisory community.
EIOPA's Chair - Gabriel Bernardino - opened the event stating that although introducing the PEPP is an ambitious goal it is absolutely worth pursuing and feasible. Citizens need to save more for retirement, which could be fostered and facilitated by simple, standardised, cost-effective and, most of all, trustworthy 3rd pillar retirement savings products. The PEPP aims to be that product. In order for it to offer value for money costs must be low. An efficient internal market helps to reach economies of scales and cost savings .
Nathalie Berger from the European Commission underlined the importance of expanding the internal EU market for personal pension products and how the PEPP could play its part in complementing an effective Capital Markets Union. Long-term investment goals, she argued, could be matched by long-term saving for retirement to support economic growth and to lead to better returns for pension savers and investors alike. Before deciding on taking legislative action to introduce the proposed PEPP the Commission will assess if the product is indeed likely to generate more pensions savings and if the PEPP will be able to overcome the currently perceived obstacles to offering cross-border personal pension products. This is where the EU can help and where EIOPA's advice is needed. Introducing a single EU market for PEPPs is ambitious, but not impossible.
Ambrogio Rinaldi, Chair of EIOPA's Task Force on Personal Pensions, to set the scene, provided an overview of the envisaged PEPP product characteristics and the accompanying supervisory and consumer protection measures that need to be taken in order to ensure that the PEPP will indeed be a trustworthy product that offers value for money in the future.
Two consecutive panel sessions then focused on specific topics described in EIOPA's Discussion Paper, with the first panel debating PEPP issues from a provider's point of view and the second one from a consumer perspective. The panel members (Michaela Koller - Insurance Europe, Bernard Delbecque - EFAMA, Guillaume Prache - Better Finance and Matti Leppälä - Pensions Europe) generated a lively discussion on all aspects of the PEPP.
All panellists - during the first panel session - agreed that fostering and facilitating appropriate private pensions savings is much needed. Generally, the panelists supported the idea of a PEPP and brought forward different perspectives on the different aspects and characteristics of the PEPP. Examples: Where some argued the PEPP's default investment option should always provide a minimum return guarantee, others were of the opinion that, due to the long-term horizon of the product, life-cycling strategies are equally, if not more, suited. It was also suggested that it should be possible to develop defaults with collective investment strategies (smoothing/profit-sharing).
While discussing the importance of the PEPP offering value for money, and the role that capping costs could play in ensuring this, the view was expressed that in order to prevent overregulation introducing a cap on costs should perhaps be limited to the life-cycling options only. The insights shared will be useful for EIOPA when writing its final advice on introducing the PEPP.
During the second panel session all panellists emphasised the importance of providers offering fair and clear information to consumers. For example disclosure of the characteristics of the default investment option should clearly point out that the PEPP is a long term savings product where the accumulated capital can – in principle – not be easily accessed and what are the consequences of a product or provider switch. In addition the importance of the internet as one of the suitable distribution channels for the PEPP was underlined.
EIOPA was very pleased that the audience made ample use of the possibility to share their views and ask questions concerning EIOPA's current views with regard to the PEPP.
Evolving ways to distribute financial services products could also contribute to keep the costs low and foster simple products. Community Life's Claudia Lang shared her practical experience on innovative, internet-based distribution solutions for offering financial products to consumers. If desired by the consumer, adequate advice can also be given via this channel.
Thanking the panel members and the audience for their valuable contributions, EIOPA's Director of Regulations - Manuela Zweimüller - closed the event stating that the discussions during the public event strengthened her belief that the PEPP is an effective way to encourage citizens to save more for retirement. It is also clear however that more work needs to be done with regard to developing an adequate default investment option, a viable 'free of charge' switching possibility and that the process of developing cost-effective distribution methods should be entered into prudently. The drive to lower costs should not lead to consumers receiving insufficient levels of advice.
Furthermore, establishing a centralised platform where consumers can effectively compare PEPPs would be beneficial. In order for the PEPP to become successful, gaining consumer trust is key. She therefore indicated that it will be essential to introduce a robust set of rules regulating both the PEPP and the PEPP providers. The latter should be able to compete for business on equivalent terms. EIOPA is indeed ambitious in promoting the introduction of a truly Pan-European PEPP which can offer value for money to all European citizens. EIOPA is convinced that if there is a will to ensure that citizens will have a decent retirement income, there will be a way of introducing the PEPP. Her key message was therefore: "We need a PEPP with pep!".
Following the European Commission's initial request for technical advice on ways to develop an EU single market for personal pensions (July 2012), EIOPA subsequently published a Discussion Paper (May 2013) and preliminary analysis of this topic (February 2014). The Commission followed up on this analysis by issuing a Call for Advice to EIOPA (July 2014).
EIOPA focused in the initial step of its advice on analysing how to introduce a personal pensions product through a 2nd regime Regulation and its potential role in fostering an effecient Capital Markets Union. EIOPA published its Consultation Paper on the topic in July 2015, coining the term for its proposed product as "the PEPP".
The programme of the event can be found here.
CVs and photos of the Speakers and Moderators