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Article | Global News Briefs

European Union: Regulation on a pan-European Personal Pension Product is approved


April 26, 2019

The European Parliament has approved a regulation on a pan-European Personal Pension Product (PEPP).


The European Parliament has approved a regulation on a pan-European Personal Pension Product (PEPP), which will apply 12 months and 20 days after it is published to the Official Journal. Being a regulation, as opposed to a directive, its requirements apply directly in European Union (EU) member states with no need for devising and implementing domestic legislation; however, if a member state wishes to confer beneficial tax treatment on PEPPs, national law might need to be amended. The European Commission (EC) put forward its original PEPP proposal in 2017 (see July 2017 Global News Brief).


The PEPP will:

  • Be offered by providers who will register their product with the authorities of their “home” country: The original EC proposal would have required providers to obtain authorization from the European Insurance and Occupational Pensions Authority.
  • Offer up to six (as opposed to five, as originally envisaged) investment funds:
    • PEPP providers will have to include a default investment route that provides a form of guarantee or “risk mitigation technique,” with providers having some flexibility as to how they approach this (referred to as a “Basic PEPP”).
    • Charges and costs under a Basic PEPP are capped at 1% of assets per annum. This cap will be reviewed every two years and potentially changed by the EC.
  • Be available to employees, the self-employed and unemployed in all EU member states: The original proposal required providers to accommodate compartments for all member states within three years of launching their product. Under the final terms this has been dropped, although a given provider’s PEPP must cover at least two member states.
  • Potentially be tax relievable in line with national policies of the member states: At least, the EC encourages member states to grant tax relief on the same basis as they do for domestic plans.
  • Be portable across borders: In addition, the PEPP will allow individuals to “switch” free of charge when they change their country of residence.


The EC cites research suggesting that the PEPP (with tax incentives granted) would lead to EUR 0.7 trillion more assets under management by 2030 than would otherwise be the case. If a substantial PEPP market does indeed develop, employers should consider whether this would have any effect on their retirement plan offerings.

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