EIOPA issued its initial preliminary report on the creation of a single market for third-pillar pensions in the European Union. Following a request by the European Commission, EIOPA’s report looked at prudential regulations and the consumer protection measures needed to create a single market for personal pensions.
EIOPA identified two feasible alternatives for the creation of a single market. One of the options on the table is the introduction of common EU rules for all existing and future personal pensions by way of a Directive, providing requirements for enhanced consumer protection and covering the whole spectrum of existing products. On the other hand, EIOPA entertains the possibility of introducing a European Regulation that accommodates tax differences and other divergences among the regimes of Member States. It should enable transferability of accumulated capital and highly standardized product rules.
The findings of the analysis carried out by EIOPA support both the proposal to establish a Directive as well as the option for a Regulation.
However, EIOPA’s report also showed that taxation, social law and contract law may appear as major obstacles to the much-needed harmonization. Currently, transfers of capital between providers in different member states are subject to withholding tax or prohibited entirely. The existing and significant differences in taxation policy on investment income in member states also cause concern.
Gabriel Bernardino, EIOPAs chairman, said that “pensions should also be dealt with from a European perspective. The advantages for consumers, providers, and for the broader EU economy are obvious”.
Please read the EIOPA Preliminary Report to the European Commission here.