FESE response to the Commission consultation on supplementary pensions

Simple and effective cross-border investment and savings products allow retail investors’ active participation in the capital markets and supports the objectives of the Savings and Investments Union.

FESE responded to the European Commission’s consultation on supplementary pensions (here), providing key recommendations on the review of the PEPP regulation and of the IORP II Directive:

The PEPP Regulation review

• The PEPP should be reformed to facilitate a true “EU 401K”, offering flexible investment options and allowing retail savers to make direct investments in shares and bonds.
• It should also promote long-term investments through appropriate incentives, without preventing investors from withdrawing from the plan should they need to do so.

Auto-enrolment

• Member States should explore transitioning from traditional pay-as-you-go models to (partly) funded systems and promoting market-based pension fund enrolment as a standard practice.

IOPR II Directive review

• IORPs should continue to have the option – not the obligation – to invest in broad and diversified portfolios based on the risk appetite of the clients and with adequate investor protection. Investment limits should be critically assessed and used to ensure effective and targeted investor protection.
• To increase the number and scale of IORPs in Europe, FESE would propose appropriate tax incentives and subsidies to increase the offer and use of occupational pension schemes.
• The IORP Directive could be developed in the direction of a “European 401(k) plan”, including specific incentive schemes for IORPs to invest in European IPOs.
• An IORP passporting regime with harmonised registration or authorisation process could improve cross-border performance.