The Dutch Federation of Pension Funds (Pensioenfederatie) has joined a growing chorus of European pension bodies raising concerns about potential plans to extend the basic Pan-European Personal Pension Product (PEPP) into the workplace. 

As part of its consultation on supplementary pensions, the European Commission (EC) is gathering views on whether the basic PEPP should be explicitly open to use in a workplace pension.

This particular question has received a divided response from industry organisations. While some, such as the European Insurance and Occupational Pensions Authority (EIOPA), have expressed support for the idea, others, such as the European Association of Paritarian Institutions (AEIP), have urged the EC to instead focus on strengthening occupational pensions.

Whilst Pensioenfederatie welcomed the consultation more widely, emphasising that greater attention on pensions is "crucial" in an ageing Europe, it confirmed that it does not support using PEPP products in a workplace context when a well-functioning occupational pension system is in place. 

"While we fully support the expansion of funded, occupational pensions across the EU, allowing the PEPP into a workplace context causes consistency issues," the group stated.

"There are key differences between PEPP and IORP II: first, IORP II is based on minimum harmonisation, while the PEPP regulation is maximum harmonisation and second, the PEPP regulation regulates pension products, while the IORP II regulates institutions.

"Allowing PEPP in a workplace context will lead to inconsistencies (e.g. on information rules) between occupational pensions within a single Member State."

In addition to this, the federation argued that employers already have sufficient possibilities of arranging an adequate pension scheme in the work context, apart from PEPP.

These occupational pensions, the federation said, are carefully designed and based on national characteristics, such as the reach and level of the state pension and the broader social security system, the level of financial literacy and risk appetite of the population, social partners' governance structures, and more.

Given this, it argued that it is not possible to design a harmonised workplace PEPP in such a way that it can take this diversity into account.

Pensioenfederatie added that if workplace PEPPs are pursued, member states should have the option to prohibit their use in this context, ensuring they do not conflict with existing occupational pension schemes or national social and labour laws.

This is in line with previous comments from PensionsEurope, which also suggested including an opt-out clause for member states if the plans were taken ahead, warning that such a move could disrupt national pension systems.

More broadly, the federation agreed on the need for a more prominent role for pensions, warning that the ageing population in Europe has seen the sustainability of pension and healthcare systems put increasingly under pressure. 

Whilst the federation confirmed that "Dutch pension funds are not allowed to offer PEPPs, nor have the ambition to do so", it clarified that it still "strongly supports" the objective of increasing funded pensions in Europe.

"In those member states where occupational pensions are underdeveloped, the third pillar can play a role in giving EU citizens access to funded pensions," it stated.

"Having good, trustworthy and cost-effective third pillar products is therefore necessary, and the PEPP could offer an additional solution next to existing national products.

"The PEPP regulation should provide for such a product and be attractive enough for market uptake."

However, it agreed with other European organisations that changes to the existing PEPP regulation are needed, arguing that the PEPP is "not only marred by supply-side issues, but also by low pension awareness among individuals, procrastination when it comes to saving for retirement in general and a low demand for cross-border pension products".

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