Abstract
Personal pension markets are unequally developed and personal pension products are unequally affordable across the European Union (EU). People who wish to save more for retirement need a greater choice of suitable personal pension products that rely on capital markets-based investments.The paper aims to present and explain the need for product diversity in the pension scheme. This kind of proposal should create a quality label for EU personal pension products and increase trust among consumers, but also could lead to complications and interference with the current system at national level. An EU initiative on personal pensions could therefore complement the current divergent rules at EU and national level by adding a pan-European framework for pension, for individuals who wish to use this additional saving option.
Highlights
Europe is facing an unprecedented demographic challenge
Personal pension markets are unequally developed and personal pension products are unequally affordable across the European Union
People who wish to save more for retirement need a greater choice of suitable personal pension products that rely on capital markets-based investments
Summary
Europe is facing an unprecedented demographic challenge. For every retired person in 2060, there will only be two people of working age, compared to four today. The offers are concentrated in a few Member States, while in some others they are nearly non-existent This variation in supply is linked to a patchwork of rules at EU and national levels, which impede development of a large and competitive EU-level market for personal pensions. This is the reason why the Commission launched recently a proposal that will lay down the foundations to offer consumers a new pan-European option to save for retirement. They will complement existing state-based, occupational and national personal pensions, but not replace or harmonise national personal pension regimes
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