On request of the European Commission, the European Insurance and Occupational Pensions Authority (EIOPA) issued a Report on the prudential regulations and consumer protection measures needed to create a single market for personal pensions.
EIOPA’s analysis has revealed that taxation, social law as well as difficulties in the area of harmonisation of contract law appear to be the most significant hurdles.
Building on these outcomes, EIOPA has identified two main options for creating the single market for personal pensions. Option one is to introduce common EU rules for all existing and future personal pensions by way of a Directive, providing for enhanced consumer protection requirements to cover the whole spectrum of existing products.
Option two is to introduce a European Regulation that accommodates the tax and other differences among the regimes of Member States. It should enable transferability of accumulated capital and highly standardised product rules. The findings of the analysis support both a proposal to establish a Directive and a Regulation.
EIOPA’s Report was driven by the following principles:
-Achieving mass of scale on the one hand and competition on the other hand are both key preconditions to increase returns and decrease costs;
-Trust in products is of great importance;
-Enhanced focus on transparency; better information leads to better decisions.
-Giving projections and informing about costs helps consumers in their decision making.
Gabriel Bernardino, EIOPAs chairman, comments “Pensions should also be dealt with from a European perspective. The advantages for consumers, providers, and for the broader EU economy are obvious. EIOPA is committed to strongly promote this single market for pensions. Our Report should lay the foundation for future EU initiatives aimed at fostering sustainable, adequate and safe pensions for EU citizens.
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