EFAMA unveils its proposals to simplify the PEPP regulation and increase demand

Today, the European Fund and Asset Management Association (EFAMA) published its proposals to simplify and upgrade the Pan-European Personal Pension Product (PEPP) Regulation. Boosting pensions is a crucial part of achieving the Savings and Investments Union's goals of promoting more retail investments and growing EU capital markets. The European Commission is expected to propose changes to the PEPP in the second half of 2025, and our proposals outline what asset managers need to do to make this product a success in the future.

While the measures we propose require amending the PEPP Regulation, they do not call for a major overhaul. Equally crucial to the PEPP’s success is the adoption of measures aimed at increasing demand for it. 

The main messages of the paper are summarized as follows:

• PEPP providers should be able to offer national subaccounts voluntarily rather than making them compulsory. This flexibility would enable more providers to enter the market, as they would not necessarily need the administrative capacity to offer the PEPP in several Member States.

• Since the Basic PEPP was designed as a simple and safe pension product, providers should be allowed to offer it without requiring financial advice. 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.

• Life-cycle investment strategies should be regulated without mandating stochastic modelling or minimum capital guarantee probabilities – such constraints push providers toward low-yield fixed-income assets that do not fit the risk-return profile of many retail investors or benefit the broader economy. 

• We share EIOPA’s view that the 1% fee cap constrains potential providers’ ability to offer the PEPP and that the focus should be on whether a PEPP offers value for money, considering savers’ needs, objectives, and characteristics.

• As the PEPP must compete with existing pension products, it is crucial that Member States apply the most favorable tax treatment available to these products. 

• 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. This shift would help expand second-pillar pension coverage, particularly among SMEs, and drive a substantial increase in demand.

Bernard Delbecque, Senior Director for Economics and Research at EFAMA, commented: “To increase the number of providers and drive demand for the PEPP, we must simplify regulatory constraints, introduce tax incentives, remove the 1% fee cap, and expand the PEPP to serve as both a personal and occupational pension product. Our proposals offer pragmatic solutions to achieve this, unlocking investment in high-growth assets and ensuring that the PEPP contributes effectively to the European Savings and Investments Union’s goals.”

Tanguy van de Werve, EFAMA Director General, commented: “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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Notes to Editors

Read our high-level position on SIU here and our comments on the communication on the SIU here.

For further information, please contact:

Hayley McEwen

Head of communications and member development