“Pan-European Personal Pension Product”. In the English acronym, pep. This is the name of the new instrument on which the EU is working to strengthen supplementary pensions and thus reduce the pension gap European Union - the difference between the pensions and the final salaries of those who leave the job - which according to estimates by theEfama it reaches 2 trillion euros a year.
Pepps may be offered by banks, insurance companies, pension funds and management or investment companies. They will be intended not only for workers (self-employed and employees), but also for students and the unemployed. Unlike open pension funds and Pips (individual pension plans), PEPPs are designed to be harmonized at EU level, so that individual intermediaries can place them in all EU countries, including via the web.
Unfortunately, however, there are problems. The European Commission published a first proposal for a PEPP regulation in June 2017, after which the European Council drafted another version. Now we need to arrive at a synthesis that also takes into account the indications that have arrived in the meantime from the European Parliament. According to some predictions, the final text could see the light in the early months of 2019. But we already know it will contain a chasm.
As underlined in a recent study by the Association of Italian Insurance Companies (Ania), the number one problem with the Pepps is that they will be born without “fiscal propellant”, ie without the incentives envisaged throughout Europe to encourage taxpayers to accumulate savings in supplementary pension schemes.
With treaties in hand, the unanimous consent of all the members of the Union was needed to introduce an ad hoc tax regime or to extend the bonuses allocated by each country to supplementary pensions to the Pepps. Too complicated: the Commission, the Council and the European Parliament have preferred to delete the fiscal chapter from the regulation proposals to transfer it to a recommendation (non-binding) in which it is hoped that the Member States will grant Pepps the concessions envisaged for forms of supplementary pension already on the market. However, if this does not happen or happens to a limited extent, the new pan-European pension products are doomed to failure.
"Like any form of supplementary pension, its success will depend on the tax incentives that will be granted, but all of this currently represents only a wish", he commented Maria Bianca Farina, president of Ania, during the conference “The new supplementary pension scheme and the Pepp challenge”, organized on Wednesday in Milan by the Association.
It also raises some concerns the qualification of "pan-European" product, since – as the legislation is taking shape – the Pepps will not be a unitary reality, but a combination of complex national products. The project, explains Farina, "will be declined in a different way in each country of the Union, with complicated methods to ensure its portability". In any case, "as insurers - concludes the president of ANIA - we hope that the project will gain strength along the way" and that the inconsistencies will be overcome "in the final phase of the legislative process".
Also second Andrea Lesca, Head of Relations and Corporate Welfare Networks of Intesa Sanpaolo Life, Pepps can be “an opportunity for growth for the Italian market. In a few months, the regulatory framework will be definitive, but today we already know that this new pension piggy bank will be available to everyone, whether working or not".
