Insurance EuropeInsurance Europe
EIOPA’s draft PEPP proposals are overly ambitious and lack crucial technical details

Insurance Europe has warned that the approach taken by the European Insurance and Occupational Pensions Authority (EIOPA) to draft proposals for technical standards that set out the details of the pan-European personal pension product (PEPP) is extremely ambitious, with EIOPA exceeding its mandate, which is set by the PEPP regulation, on several occasions.

Insurance Europe has therefore advised EIOPA to take a less ambitious approach, especially considering the scope and complexity of the task, as well as the short timeframe by which it has to deliver its advice to the Commission.

Crucial technical details that are currently missing from EIOPA’s consultation document must also be clarified before EIOPA submits its advice to the Commission in August. In particular, EIOPA must explain the economic stochastic model that it suggests to use to support its holistic approach to risk, reward, performance and risk mitigation techniques.

On the consultation itself, Insurance Europe also stressed the need for a level playing field between risk mitigation techniques and said that the provision of guarantees should not be penalized. In a recent survey conducted by Insurance Europe, 60% of respondents indicated that “safety” is their most important priority when saving for retirement. As such, guarantees provide a valuable tool in encouraging people to put aside money for their old age.

Another important factor in determining the success of the PEPP will be whether EIOPA takes a strict “all-inclusive” approach in specifying the scope of the fee cap. Certain features – such as guarantees, mandatory advice and the PEPP’s inherent long-term nature – will require specific attention to ensure both the feasibility of this requirement and that savers can benefit from the highest quality standards. PEPP information documents should also make the most of opportunities offered by digitalization and layering tools to avoid overloading consumers with too much information.

You can read Insurance Europe’s full submission to EIOPA’s consultation here.

Published 2 March 2020