MNI EXCLUSIVE: States Start Tough Pan-European Pension Talks

By Jean Comte

     LONDON (MNI) - Experts from the 28 EU member states will meet on Friday in

Brussels to start talks on the proposed pan-European Personal Pension Product

(PEPP), according to preparatory documents seen by MNI.

     The draft text, exclusively revealed by MNI in June, proposes to set up a

PEPP label for safe European personal pension products. The use of the label

will be approved by the Frankfurt-based European Insurance and Occupational

Pensions Authority (EIOPA) under strict conditions.

     The conditions include a "capital protection investment option" in which

the subscriber is guaranteed to recoup her invested capital, the absence of

excessive leverage, the possibility to switch provider every 5 years with no

excessive fee, and a "portability" feature. This last item is pivotal, as it

allows savers to subscribe to the same product in different countries, through a

set of national "compartments".

     According to preparatory documents obtained by MNI, Friday's talks are

supposed to focus on five key features of the proposed structure : the

investment options, the portability, the EIOPA supervision, decumulation and the

possibility of switching between providers.

     The talks are only expected to be of an exploratory nature, as it is too

early to negotiate compromises on the substance on the text. 

     Still, the draft documents raise the possibility of making some significant

changes. They suggest creating a "central database for information about

national requirements" for the PEPP. 

     They also propose enhancing co-operation between EIOPA and the national

supervisory authorities. Another document discusses the need to remove any cap

when it comes to the fees linked with switching PEPP providers - the legal text

only refers to "reasonable costs".

     -Reluctant Member States

     Ahead of tomorrow's meeting, several member States have already expressed

strong reservations regarding the proposed PEPP, in a set of written comments

circulated in early September and also obtained by MNI.

     Germany, for example, expressed reservations about the need for an EU-wide

action. 

     "Because of strong inter-linkages with social, labour and tax law and the

necessary respect of national specifics, the establishment and design of private

pension schemes are mainly an issue of national decision-making," wrote Berlin.

     The Netherlands and Belgium also "stressed the national competence of

member states on taxation" and opposed giving additional powers to EIOPA,

stressing that this needs to go through a revision of the European Supervision

Authorities regulation.

     Finland appeared to be worried about the impact on life-insurance

companies, which would see the emergence of new competitor with lower capital

requirements. Finally, Romania doubted that there would be a real demand for the

PEPP in the EU, so the "economies of scale" that the EU Commission is expecting

might never materialize.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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