On Monday 3 September, the MEPs of the committee on economic and monetary affairs of the European Parliament approved (29 votes to 10 and 17 abstentions) the draft report by Sophie in't Veld (ALDE, Netherlands) on the creation of a pan-European personal pension product (PEPP).
However, it was by no means a foregone conclusion, with the vote already having had to be postponed once due to the degree of disagreement between the political groups (see EUROPE 12060).
According to our information, “last-minute” negotiations took place this Monday, with the S&D group unable to take position on the compromise until that afternoon.
In order to back the text, the Social Democrats are calling for a change to the definition of capital to allow pensioners to recover all of the nominal capital subscribed, by disregarding the return on investment in the calculation, if this is negative, and tabled an oral amendment to this end.
However, this last-minute amendment did not go down well with the other political groups and was subsequently rejected. “It is a bit late to table an amendment that has never been debated on its substance throughout the entire course of the negotiations”, said Brian Hayes (EPP, Ireland).
For her part, in't Veld defended the compromises reached, which she considers balanced, despite their complexity.
Overall, the compromise text retains the rapporteur's idea of a “base PEPP”, which should be a “simple and safe product” that is easy to acquire each member state (see EUROPE 11985).
This should be a default option that would protect the saver's capital, either by applying risk attenuation techniques through a life-cycle investment strategy, or through a capital guarantee, the text explains. It adds that for this product, 35% of the capital should be taken in the form of an annuity.
The MEPs also agreed to allow certain accredited occupational pension institutions to offer PEPPs under certain conditions, whilst stressing that the assets and liabilities corresponding to the PEPP should be kept separate as possible, with no option to transfer to the institution's other pension activities.
It is worth noting that the oral amendment of the Greens/EFA group aiming to exclude alternative investment fund managers from the scope of application was rejected.
Concerning portability, the MEPs consider that the supplier should provide information in the contract itself on available national compartments.
The text provides that if a PEPP provider cannot offer a national compartment in a member state, it must offer the saver other portability options, such as the possibility of continuing to save in a PEPP through a partnership agreement. If such partnerships do not exist, the saver would then be able to change provider free of charge.
The MEPs also added an obligation to the text requiring PEPP providers to take account of environmental, social and governance factors in their investment decisions and risk management systems.
It is worth noting that they also proposed the creation of cross-border collective redress mechanisms for consumers to apply for compensation.
The MEPs also approved (47 votes to 8 and one abstention) the opening of negotiations with the Council - which adopted its position at the end of June (see EUROPE 12045). (Original version in French by Marion Fontana)