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EIOPA publishes report on personal pensions

The European Insurance and Occupational Pensions Authority (EIOPA) recently published a preliminary report on an 'EU single market for personal pensions'.

This was at the request of the European Commission, and was accompanied by:

In July 2012, the European Commission asked EIOPA to provide technical advice on the prudential regulations and consumer protection measures needed to create a single market for private personal pensions (PPPs). EIOPA consulted with stakeholders, and the ABI submitted a response.

Despite a clear recognition of existing obstacles (such as taxation, social law, contract law and diversity of products) - both by stakeholders who responded to their consultation, and by EIOPA members themselves - EIOPA concludes that the creation of a single market for PPPs would be advantageous for consumers, providers and the broader EU economy. EIOPA proposes two possible solutions:

  1. a new EU Directive setting out basic consumer protection rules for all existing and future personal pensions such as standardised key information documents and harmonised sales rules
  2. a “2nd" alternative legal (otherwise known as the “29th”) regime in the form of a Regulation, which would accommodate existing identified obstacles to a single market for PPPs. The intention would be to create a new highly standardised product, similar to a UCITS

EIOPA does not think there is any need to develop an EU prudential framework for PPP providers who are already regulated at EU level, but there is a strong case for a Directive that aligns Member State policyholder protection measures .

EIOPA held a public hearing on the report in Bratislava, Slovakia on April 15, 2014. 

Separately, the European Commission’s Consumer Protection department, DG SANCO, also consulted on third-pillar retirement products in 2013 ( read the ABI response), and have now published a summary of responses. The report merely summarises the consultation responses, and does not present any suggestions or solution to identified issues. There is currently no indication as to how or whether the Commission will make use of the outcome of the consultation.

Once the new Commissioners are settled in their roles later this year, the Commission is expected to issue a more comprehensive Call for Advice to EIOPA, with the objective of considering a legislative proposal to mobilise more personal pension savings for long-term finance. This is expected to cover:

  • the market – what are the key features of personal pensions?
  • governance issues, including use of depositories and fit and proper requirements for those running personal pension schemes;
  • information to members;
  • quantitative issues, to help the European Commission understand the situation of those personal pension schemes with guarantees and liabilities;
  • distribution, such as what rules might be needed for intermediaries;
  • cross-border issues, such as how to ease cross-border transfers and how to ensure service providers can operate in other Member States;
  • product regulation, including the question of to what extent this should be standardised. 

National regulators will have to decide whether GPPs should be subject to the IORP Directive (on the grounds that they are set up by employers and are workplace-based) or subject to the new EU legislation on personal pensions (on the grounds that the contract is between the individual member and an insurance company).

Last updated 01/07/2016