BETTER FINANCE welcomes the recent opinions of the Committee on Employment and Social Affairs (EMPL) and the Committee on Internal Market and Consumer Protection (IMCO) on the proposed “PEPP” EU Regulation, but remains concerned regarding the recent developments at the European Parliament and Council, in particular with regards to the capital “protection” and the tax treatment of the future PEPP.
To shed some light on the debate between the capital “guarantee” at retirement and the “life cycle” approaches for the default investment option of the PEPP, BETTER FINANCE just published an independent study on life-cycle approaches.
Although the study is based on a limited sample, BETTER FINANCE found too much divergence between the starting and ending asset allocations of the portfolios of the different life cycle products reviewed, as well as between their rebalancing (de-risking gradient) strategies, especially in the EU markets. Fund documentation in the US also contains more and far clearer information on the evolution of asset allocation over time. What’s more is that the average annual fee for these funds was found to be above 1,6% in the EU versus about 0,6% in the US.
Read the full press release here.