In November, the European Commission presented the Supplementary Pensions Package, with proposals to strengthen supplementary pensions in Europe. The package consists of recommendations for member states and legislative proposals for both the revision of the IORP II Directive and the PEPP Regulation. From DUFAS we welcome this package as an important step towards stronger and future-proof supplementary pensions in Europe. Well-functioning pension systems are essential for adequate incomes after retirement and as a key to mobilizing long-term capital for the European economy. In doing so, the pension package directly aligns with the broader ambitions of the Savings and Investment Union (SIU). In our position, we address a number of concerns and refinements important for workable implementation for asset managers.
IORP
Clarifying the Prudent Person Principle and explicitly recognizing long-term investment, including investments in equities and illiquid assets, will help improve retirement outcomes and increase investment in Europe. This fits well with Dutch practice. At the same time, it is important to stay sharp on elements that could lead to unintended effects. For example, the proposed cost transparency requires a more principle-based approach that does justice to collective risk sharing. We also stress the importance of proportionality and avoiding short-term incentives in proposals concerning duty of care and performance monitoring. Finally, we are critical of the proposed depositary function, where existing national safeguards are already effective.
PEPP
Compared to previous proposals, the PEPP is significantly flexibilized. The low uptake of PEPP shows that the current framework is not working adequately. We support proposals that make PEPP more attractive to both providers and participants, such as the removal of the mandatory Basic PEPP, more room for lifecycle investing, and lower distribution thresholds through execution-only channels. Crucial to the success of PEPP remains equal tax treatment by member states. Without this, the product will not take off. In addition, we stress that PEPP should play a complementary role alongside well-functioning national pension systems, and not undermine them.
Recommendations
We welcome the recommendations on pension statements, dashboards and automatic participation. These can encourage member states where a solid pension system is not currently in place to get started. At the same time, it is important that these recommendations be pragmatic and build on existing, well-functioning national systems.
Follow-up process
The proposals will be discussed in the European Parliament and the Council in the coming period. From DUFAS we remain actively involved in this process and will continue to engage with European and national policy makers.
