Could pan-European personal pensions be on the way?
Possibly, if the recent report produced by the European Insurance and Occupational Pensions Authority, gains traction.
The European Union has been taking an interest in the European personal pension market since 2012. The latest EIOPA report, out for consultation until 5 October 2015, discusses a number of aspects of a “second regime” authorisation of personal pension schemes – such “Pan-European Personal Pension” (PEPP) products being licenced to operate throughout the EU. This PEPP regime would operate as an alternative to existing national legislation under which personal pensions are currently authorised. The report discusses how such a second regime would operate and the nature of the regulatory requirements (which focus on product features and information disclosure).
Another option for pan-European personal pensions would be for existing personal pensions authorised by national regulators to be “passported” so that they can operate cross border (see Pensions Bulletin 2013/22). However, discussion of this option has been deferred.
EIOPA hopes to deliver its final advice to the European Commission in early 2016 and it may be that sometime after that there will be EU legislation designed to kick-start pan-European personal pensions, whether by passporting or under a second regime or both.
EIOPA comes up with good practices on transferring pension rights
The European Insurance and Occupational Pensions Authority has published a report on transferability of supplementary pension rights in which it identifies eight main impediments to cross-border and national transfers as well as thirteen good practices to overcome these.
Some of the key messages are as follows:
- Domestic and cross-border transfers should be treated equally – EIOPA considers it a Good Practice if cross-border transfers are not subject to stricter regulations or requirements than domestic transfers
- Scheme members should receive adequate information automatically upon termination of employment, in order to take informed decisions on whether a transfer is beneficial for them; and
- In case scheme members are charged for the transfer, such charges should reflect the actual work necessary to carry out the transfer
Comment
This is just internal EU reporting. There had been an intention to deliver a Directive encompassing transfers but this was watered down, with just a statement in the final Directive that member states should endeavour to improve transferability. In the meantime EIOPA was asked to explore the issue, which it has now done.
Government turns on more aspects of the Pensions Act 2014
In the fifth Order of its kind the Government has commenced a number of provisions of the Pensions Act 2014 which received Royal Assent last May (see the LCP guide to this Act).
The Pensions Act 2014 (Commencement No. 5) Order 2015 (SI 2015/1475) includes the following commencement provisions:
- Ending of contracting out – enabling regulations to be made in connection with restrictions that will apply where after 5 April 2016 the rules of a scheme that was contracted-out are to be altered, or such former contracted-out liabilities are to be transferred out or paid as a lump sum
- Single tier state pension – commencing that part of the Act and enabling regulations to be made dealing with changes to the savings credit element of the State Pension Credit which will result in the phasing out of assessed income periods and the limiting of savings credit for certain “mixed age” couples – ie couples where one has attained State Pension Age before 6 April 2016 and the other has not
- Class 3A voluntary national insurance contributions – allowing this top up scheme to come fully into force on 12 October 2015, so that from this date an eligible person in Great Britain may pay a class 3A contribution in return for a unit of additional pension
This Pensions Bulletin does not constitute advice, nor should it be taken as an authoritative statement of the law. For further help, please contact David Everett at our London office or the partner who normally advises you.
