EU plans for European personal pension under fire from insurance giants

Published:  12 May at 6 PM
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A trade body serving the insurance and pensions industry has attacked the EU’s plan to introduce a Europe-wide personal pension.

The EU’s new personal pension proposal would benefit not only EU citizens but also expats living, working or retiring in EU member states. On offer to consumers would be the same benefits at the same cost, irrespective of their country of residence.

Presented as the Pan-European Personal Pension (PEPP) it’s offered by the European Insurance and Occupational Pensions Authority and would mean pension portability across all EU member countries, thus simplifying life for expats working overseas and retirees wishing to spend their days in sunnier climes. Other Pan-European products lined up include savings plans, mortgages and life insurance.

Although QROPS now provide a degree of portability for those with UK occupational or private pension plans, the manner in which the product has been misused has attracted a deal of criticism following the introduction of pension freedoms. According to the UK’s Financial Conduct Agency (FCA), a significant percentage of retirees have been mis-sold the product or have been scammed by pension fraudsters.

Unsurprisingly, the trade body slamming the new pension plan represents the vast majority of EU pension and insurance providers. Insurance Europe claims to be the voice of the industry within the EU, acting as a mega trade union with 34 members plus their one million employees.

Amongst its UK members is Aviva’s acquisition Friends Provident International, at present under customer–led scrutiny for its use of dodgy IFAs working illegally in Asian countries. The positioning document produced by Insurance Europe initially supports the idea behind the PEPP, but goes on to slam it for being poorly designed and unsuitable for client needs.

Additionally, it notes that PEPP’s cap on charges will discourage pension providers from offering the new plan, and criticises its charging structure for its effect on companies’ financial risks. It seems that, whatever benefits the new plan offers to its customers, for the present providers it’s all about the money.
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