The European Union presidency will start negotiations with the European Parliament soon to approve the new European personal retirement arrangements, following the European Council's approval of the proposed regulation given on Tuesday.
The European individual retirement plans were proposed by the European Commission last year to give employers a way to offer portable workplace defined contribution plans across Europe. Considered a new class of retirement arrangement, the pan-European pension product known as PEPP will allow especially mobile workers and others to save into a single savings vehicle even if they change the employer and country of work.
Money managers will be able to develop, market and distribute PEPPs in different European markets and pool assets more effectively, the council said. Insurance companies, banks, occupational plans and investment firms, in addition to money managers, will be able to offer PEPP products.
PEPP providers will also be allowed and encouraged to invest part of the portfolio in sustainable investments such as infrastructure projects, the draft regulation said.
"The pan-European pension product ... will promote competition amongst pension providers, enabling them to sell pension products outside their national markets and giving savers more choice over how and where to place their savings," said Vladislav Goranov, minister for finance of Bulgaria, who currently holds the European Council presidency, in a news release.
Under the PEPP regulation, workers will have the right to switch providers after a minimum of five years. The commission plans to cap any fees incurred when plan participants switch providers and ensure that various investment options, including a safe default option, become available to savers. The European Commission wants to ensure that various decumulation options will also become available under this regulation.
However, the PEPP will not replace any national or cross-border arrangements, the council confirmed.
Some 27% of Europeans between 25 and 59 years old have no access to a suitable retirement arrangement, according to the data compiled by the European Commission.