If you’re an EU citizen, you may have heard of the Pan-European Pension Product (PEPP) – a new pension initiative being introduced by the European Commission.

But what exactly is it, and how does it work? In this article, we’ll take a detailed look at the PEPP and help you understand what it means for you.

What is the PEPP?

The PEPP is a new type of personal pension product that aims to make it easier for citizens to save for their retirement.

It was introduced in response to the growing need for effective pension systems across the EU, as well as the increasing mobility of workers who need to be able to take their pensions with them as they move between countries.

The PEPP was first proposed by the European Commission in 2017, and was approved by the European Parliament in 2019.

It is intended to be a standardised, cost-effective and transparent pension product that can be offered by a range of providers across the EU.

How does the PEPP work?

The PEPP will be offered by a range of financial service providers, including banks, insurers, investment firms and pension funds. It will consist of a single investment plan that can be tailored to meet individual needs and preferences.

One of the key features of the PEPP is its mobility – savers will be able to move their pension between providers in different EU countries without incurring any additional costs or losing any benefits they have accrued.

This is intended to make it easier for people who move around the EU for work or other reasons to maintain their pensions and retirement savings.

What are the benefits of the PEPP?

There are several potential benefits to the PEPP for savers, including:.

Standardisation: The PEPP will be a standardised product that is easily comparable across providers and countries.
Cost-effectiveness: The PEPP is intended to be a cost-effective option for savers, as providers will be able to offer it at a low cost due to the economies of scale inherent in a pan-European product.
Flexibility: The PEPP will be a flexible product that can be tailored to meet individual needs and preferences, offering a range of investment options and payout options.
Mobility: The PEPP will be a highly mobile product that can be transferred between providers and countries without incurring any additional costs or penalties.
Consumer protection: The PEPP will be subject to strict consumer protection rules, giving savers peace of mind that their retirement savings are safe.

What are the drawbacks of the PEPP?

While the PEPP has been generally well-received, there are some potential drawbacks to consider:.

Complexity: The PEPP is a complex product that may be difficult for some savers to understand, particularly those who are not financially literate.
Competition: The PEPP may face competition from existing pension products within countries and providers, which could limit its uptake and success.
Regulation: While the PEPP will be subject to strict consumer protection rules, there is still concern that its regulation may be too weak to fully protect savers’ interests.

Who can benefit from the PEPP?

The PEPP is aimed at anyone who is looking for a cost-effective, flexible and mobile way to save for their retirement.

It is particularly attractive for people who move frequently within the EU, as it offers a simple way to maintain their pensions and retirement savings.

When will the PEPP be available?

The PEPP is expected to be available to savers from 2022, although this may vary slightly between different countries and providers.

Conclusion

The PEPP is an exciting new development in the world of pensions, offering a cost-effective, flexible and mobile way for EU citizens to save for retirement.

While there are some potential drawbacks to consider, overall the PEPP is a positive step towards creating effective and accessible pension systems across the EU.