Sven Giegold

Pan-European Pension Product: EU-Parliament strengthens sustainability and consumer protection

This Monday evening, the European Parliament’s Economic and Monetary Affairs Committee (ECON) adopted a draft regulation to introduce a pan-European pension product (short: PEPP) with a majority of Christian Democrats (EPP), Social Democrats (S&D), Liberals (ALDE) and Greens, among others. This pension product with uniform quality standards throughout Europe will be offered by private actors as a supplement to state and occupational pension schemes and is transferable within Europe. In addition to a secure basic product with a capital guarantee as a standard option, investors can also opt for more flexible PEPP variants with higher expected returns and more risk. The annual costs and fees of the basic PEPP may not exceed 1% of the annual contributions. Our central Green demands for consumer protection and sustainable investment are reflected in the compromises. The vote is the basis of Parliament’s position for the forthcoming negotiations with the Council and the EU-Commission.


MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:


“The parliamentary position on the PEPP adopted yesterday is a breakthrough for European pension savers. PEPP products combine high standards of consumer protection and sustainability. The PEPP promises investors throughout Europe access to a reliable old-age savings product whose costs will be significantly lower as compared to existing products due to greater transparency and enhanced competition throughout Europe. In addition, the legislator limits the annual costs and fees to 1% of the annual contributions. This will put competitive pressure on the often outrageous fees for life insurance policies and investment funds in many member states.


Parliament’s position strengthens sustainable financial markets, as PEPP providers are obliged to pursue sustainability goals when investing their assets and make this public. This would make PEPPs the first European financial market product for the general population that is committed to sustainable investment from the outset.


The decisive role of the European Insurance and Occupational Pensions Authority (EIOPA) in the authorisation and supervision of the new savings products is of central importance, as it guarantees the uniform quality and comparability of PEPP products across Europe. There is a need for improvement in the supervision of the heterogeneous PEPP providers such as banks, insurance companies, company pension funds or funds, as they are subject to different prudential rules.


PEPP is a great opportunity for pension savers throughout Europe to benefit from the opportunities offered by the capital market union. Nevertheless, the PEPP lags behind highly efficient models such as the Swedish Citizens’ Fund, which provides savers with capital market returns at a fraction of the usual costs.


It is an absurd gift to the financial lobby to be against better retirement savings products in order to defend the statutory pension. Citizens have always saved for old age. For that purpose they have a right to fair and sustainable products. The European Parliament has now committed itself to this goal on the basis of our Green initiative. Nevertheless, privately funded pension products should only be a supplement to the statutory pension. PEPP must not be misused to postpone the overdue strengthening of fairness and sustainability of public pension schemes. Especially against old-age poverty, private savings can achieve little.”

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