Date: 27th February 2020

BETTER FINANCE published its Position Paper on the implementing measures (level 2) for the Pan-European Personal Pension (PEPP) product. These measures will be based on the Regulatory Technical Standards (RTS) submitted by the European Insurance and Occupational Pensions Authority (EIOPA) to the European Commission following a period of public consultations.


PEPP Key Information Document (KID)

The PEPP KID should enable savers understand and compare PEPPs, in particular:

• It must be short, simple, clear and easily understandable;

• It must be digitally interactive and machine-readable;

It must contain a clear investment objective and recommended holding period;

It must present simple and accurate indicators:

long-term past performance in comparison with a market benchmark;

• costs under the form of a Reduction-in-Wealth.

Cost cap for the Basic PEPP

The basic PEPP must represent a simple and cost-efficient default option for pension savers. The cost cap is designed as an all-inclusive 1% limit for all costs, including distribution fees.

Risk-mitigation techniques

EU legislation must address the current misunderstanding of “risk” for long-term savings products and ensure that the risk-reward approaches reflect the nature and objective of long-term and pension products. Risk-mitigation techniques for the basic PEPP require more standardisation at EU law level.

PEPP Benefit Statement (PBS)

The benefit statement must give the information and help the saver decide whether the product is still suitable for his retirement objectives and whether to continue or switch to another PEPP. As such, it must disclose the progress on reaching the objectives disclosed in the PEPP KID, the costs and how close the PEPP saver is in achievong his retirement goals.

Digital distribution

As the target clients for the PEPP will be the younger generations first, the demand for digital and online distribution may be higher and may therefore be an incentive for them to consider investing in a PEPP. Online distribution of PEPP is possible and would bring significant gains in terms of cost-efficiency, in particular relevant for the basic PEPP.