EU Proposes Pensions Without Borders For Expats

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European expats moving between countries will soon have a simplified personal pension that they can take across borders.

The European Commission has revealed details of a proposed new EU pension designed to give more choice and competitive products for retirement saving.

The personal European pension product (PEPP) will have the same standard features available in each member state.

PEPPS will be sold by insurance companies, banks, occupational pension funds, investment firms and asset managers.

The EC also explained that PEPPS will complement rather than replace state or local personal pensions.

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Tax treatment

PEPPS will also have the same tax treatment as similar personal pensions, even if the pension does not match local rules for tax relief.

Valdis Dombrovskis, Commission Vice-President, responsible for Financial Stability, Financial Services and Capital Markets Union, said: “The pan-European personal pension product is an important milestone towards completing the Capital Markets Union. It has enormous potential as it will offer savers across the EU more choice when putting money aside for retirement. It will drive competition by allowing more providers to offer this product outside their national markets. It will work like a quality label and I am confident that the PEPP will also foster long-term investment in capital markets.”

The commission says PEPPs will fill a hole in pension provision for expats as the current market is ‘fragmented and uneven’.

PEPP benefits for expats

Expats will benefit from:

  • Better choice of providers driving competition
  • High levels of consumer protection
  • The right to switch providers at a capped price every five years
  • Taking their pension across borders without having to transfer funds into another product
  • A range of drawdown options on reaching retirement age

The PEPP also aims to encourage retirement saving as only 27% of EU nationals aged between 25 and 59 years old save into a pension.

The proposal must pass the European Parliament and European Council before going on sale – and no start date has been pencilled in.

Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness said: “Today’s proposal is another example of the benefits that can be derived from delivering the Commission’s Capital Markets Union Action Plan and completing the single market for capital in the EU.”

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