PEPP only called into question by finance industry due to high costs for intermediaries
The latest draft of the
Pan-European Personal Pension (PEPP) delegated (level 2) regulation was up for
discussion last Friday during a broad and well-attended conference on the issue
of PEPP and Financial Repression organised by consumer organisations Bund der
Versicherten e. V. (BdV) and BETTER FINANCE and, attended by more than 200
participants. Gabriel Bernardino, Chair of the European Authority EIOPA, Dragoş
Pîslaru, Member of the European Parliament and the rapporteur for PEPP, and
many other important experts representing different stakeholders discussed the
opportunities and challenges presented by PEPP. Axel Kleinlein, Managing
Director of BdV and President of BETTER FINANCE, summarises the discussion:
“Nearly all stakeholders are optimistic about the future success of a PEPP. But
some lobbyists of the financial industry want more money for their
intermediaries for selling the PEPP”. Guillaume Prache, Managing Director of
BETTER FINANCE who started the conference with a speech about financial repression
adds: “In this very challenging economic situation of financial repression, the
PEPP could be the solution for more value for money and a chance to ensure a
decent retirement provision”.
At the beginning of the
conference, following a warm welcome from Edda Castello, Head of the Board of
BdV, Prache explained the meaning of financial repression. “Financial
repression is a combination of public policies that result in saver’s earning returns below the rate of inflation in
order to provide low interest or even negative yielding loans to governments
and banks. And financial repression has today reached an unprecedented high”.
This affects retirement provision vehicles like PEPP. Jan Šebo, Professor and
Vice-Deanat Matej Bel University’s Faculty of Economics and member of the
Scientific Council of BETTER FINANCE, illustrated the problematic impact of the
PEPP regulation on the Benefit Statement of a PEPP and the advantages of an
online approach during his speech. Reflecting on the cross-border rules Šebo also
pointed out that “PEPP is a product that could make us Europeans.”
The panel discussion with
Bernardino and Pîslaru, led by Kleinlein, started with a political evaluation
of the PEPP-project. Bernardino sees PEPP as an example of “successful
collaboration of all economic stakeholders”. Pîslaru has hope that PEPP will
foster the cross-border distribution of an “affordable product for all
citizens”. Later in the exchange Bernardino made
a plea for “Strong Capital Market Supervision”. Pîslaru pointed out that “the
Green Deal has to deliver good ESG-products to invest in”.
In the second panel, Dr.
Christian Gülich, EU Policy Officer at BdV, discussed the draft EIOPA r
regulation for PEPP with several experts. For the finance industry, Bernard
Delbecque of EFAMA (the investment industry) and Olav Jones of Insurance
Europe, expressed their doubts about the 1% cost cap for the Basic PEPP. To
provide “full advice” the cost cap is too low, explained Delbecque. Jones
pointed out, that “human experts who provide advice” could not be financed with
such a cost cap. Til Klein, head of the fintech Vantik stressed the fact that
PEPP represents a big opportunity for digital and online distribution. Together
with the lobbyists he agreed that tax incentives should be put in place for
PEPP, the same way is was done for other products. The fourth panellist, Hans
van Meerten, professor at the University of Utrecht, was not worried about that
tax issue, being convinced that those incentives will be given to PEPP in any
case someday. He expressed concerns about the lack of a proper definition of
capital guarantees, explaining, that even insurers can only provide a return
guarantee of 99,5 % under Solvency II.
After the conference, BdV and
BETTER FINANCE made a positive summary of the event. “BETTER FINANCE and Bund
der Versicherten stress the importance of PEPP and the need for an expert
discussion around retirement provision in times of financial repression”,
Prache explained. “We hope to host a follow-up conference in Hamburg next year
when PEPP is launched, hopefully without Corona-restrictions”, Kleinlein
concluded while donning his mask in the colours of the EU-flag.
© Better Finance
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