The European Federation of Investors and Financial Services Users, Better Finance, supported by the European Older People's Platform (EPO), launched a petition on Thursday 14 February asking EU co-legislators to provide “real” capital protection in future Pan-European Personal Pension Products (PEPPs).
Member States' ambassadors to the EU on Wednesday endorsed the interinstitutional agreement on this issue (see EUROPE 12159), while the European Parliament has yet to confirm it.
The objective of both organisations? To once again sound the alarm on what they call a “capital protection scam” (see EUROPE 12064) for the “basic PEPP”.
The final text continues to define “capital” as “aggregate capital contributions, calculated on the basis of the amounts investible after deduction of all fees, charges and expenses that are directly or indirectly borne by investors”.
However, for Better Finance, the calculation must, on the contrary, be based on the amounts saved before deducting these costs. They believe that the text should include, at a minimum, a warning in the key PEPP disclosure document about the devastating impact of inflation and fees on the real value of retirement savings over time.
In a press release, the organisation illustrates this with a concrete example. “Say that you set aside €100 in a PEPP when you get your first salary at the age of 25. You would at the very least expect to be able to withdraw those €100 upon your retirement, let’s, say at age 65. You’d be wrong”, they explain.
Indeed, according to them, over 40 years, even the annual levy of modest fees of only 1% of total savings will have reduced the capital guarantee to €60. If inflation is added - even a very optimistic rate of only 2% per year - this will have further reduced the purchasing power of the capital guarantee to only €27.
Since they have failed to convince EU policy makers, the organisations are now calling on European citizens themselves to raise their voices. (Original version in French by Marion Fontana)