The European Fund and Asset Management Association (EFAMA) has published "pragmatic" pan-European personal pension product (PEPP) regulation solutions to unlock investment, as the European Commission prepares to announce its proposals later this year.

EFAMA argued that PEPP providers should be able to offer national subaccounts voluntarily rather than making them compulsory to enable more providers to enter the market.

The association stated that providers should be allowed to offer PEPPs without requiring financial advice, suggesting this would streamline its distribution by leveraging online tools to equip potential PEPP savers with the necessary information to evaluate the product before making a decision.

EFAMA also said life-cycle investment strategies should be regulated without mandating stochastic modelling or minimum capital guarantee probabilities.

It stated that it shared the European Insurance and Occupational Pensions Authority's (EIOPA) view that the 1 per cent fee cap constrained potential providers’ ability to offer the PEPP and that they should focus instead on whether a PEPP provides value for money, considering savers’ needs, objectives, and characteristics.

Indeed, as the PEPP must compete with existing pension products, the paper said member states must apply the most favourable tax treatment available to these products.

Finally, the paper proposed that PEPP providers should be allowed to offer the PEPP as an occupational pension product to serve as an additional, complementary option alongside existing occupational pension plans.

EFAMA suggested that this shift would help expand second-pillar pension coverage and drive a substantial increase in demand.

The association added that while the proposed measures required amending the PEPP Regulation to simplify it, they did not call for a major overhaul.

EFAMA senior economics and research director, Bernard Delbecque, said the proposals offered “pragmatic solutions to unlock investment in high-growth assets and ensure that the PEPP contributes effectively to the European Savings and Investments Union’s goals.”

EFAMA director general, Tanguy van de Werve, added: “The ongoing market sell-off, while unsettling, must not distract us from the structural challenge of closing the pension gap.

"Long-term pension products are designed to ride out short-term volatility, making them well-suited to deliver stability and growth over time.”

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