BETTER FINANCE warmly welcomes the European Commission’s legislative proposals amending the EU’s framework on supplementary pensions—the IORP II Directive and the PEPP Regulation—as well as the set of recommendations it addressed the Member States regarding Pension Tracking Systems, pension dashboards and automatic enrolment schemes. This “Supplementary Pensions Package” includes a set of much welcome enhancements to the framework applicable to occupational pensions and the Pan-European Personal Pension (PEPP) product.
BETTER FINANCE supports, in particular, the concomitant introduction of a Prudent Person Principle and of an explicit Duty of care provision in the IORP framework. We see the former as granting greater flexibility to pension scheme managers to define the investment strategy most likely to offer sustainable long term returns for their members. The latter, together with stronger supervision powers for competent authorities and better information to scheme participants, balances this greater flexibility with greater accountability. Nevertheless, we believe the proposal falls short of recognizing the principle that participants in occupational pensions should play a major role in the governance of their own pension schemes.
As regards the PEPP, BETTER FINANCE supports the proposed simplification of the Basic PEPP and, there too, the greater flexibility offered to PEPP providers. Nevertheless, we express doubts that the proposed value-for-money rules might not be sufficiently effective to ensure that PEPP—especially the Basic PEPP—remain a cost-efficient alternative to existing PPPs.
We express our disappointment with the Recommendation on Pension Tracking Systems, which we doubt will lead to the development of comprehensive, reliable and empowering retirement planning tools for EU citizens.
We also express our concerns with the Recommendation on automatic enrolment. While we see automatic enrolment as a powerful tool to increase retirement savings, we note that a whole set of pre-requisite are needed to ensure that these increased savings become additional retirement income.