The Association of the Luxembourg Fund Industry (ALFI) welcomes the European Commission’s initiative to create a regulatory framework for an innovative pan-European personal pension product (PEPP). ALFI believes that the investment fund industry in general, and Luxembourg’s internationally oriented fund sector in particular, can play a key role in facilitating long-term savings in Europe and in allowing individuals to build up additional retirement income.
ALFI has already expressed on many occasions its conviction that there is an urgent need to encourage second and third pillar retirement provisions to complete insufficient first pillar retirement provisions and that the asset management industry has an important role to play in this context.
ALFI therefore welcomes the fact that the PEPP is conceived as a new type of voluntary personal pension that can be used in parallel with existing state-based, occupational and national personal pensions.
It is also commendable that PEPPs should have the same standard features wherever they are sold in the EU and that they can be offered by a broad range of providers, such as insurance companies, banks, occupational pension funds, investment firms and asset managers.
It is of essential importance that PEPP providers benefit from an EU passport, allowing providers based in one EU Member State to offer personal pensions in other EU Member States and allowing savers to sign up for a personal pension offered in other EU Member States. This will offer consumers more choice.
Last but not least, the foreseen "portability" of the PEPPs, enabling savers to transfer the benefits accumulated in one or more Member State(s) when moving from one Member State to another is an important feature to foster the increasing – and necessary – mobility of workers within the EU.
“Luxembourg is very well positioned to support the swift uptake of the PEPP”, ALFI chairman Denise Voss says, “given its long standing experience in both (i) pass-porting funds such as UCITS across borders, as well as in (ii) setting-up and administering pension fund vehicles, in many cases as cross-border and multi-employer funds.
ALFI would like to highlight, however, that aside from considering the tax treatment for PEPPs, additional efforts at the level of investor education will be key to make the PEPP a true success story.”
 The Luxembourg law foresees three types of pension fund structures, the CAA (Commissariat aux Assurances) funds, the SEPCAV (Société d’Epargne-Pension à Capital Variable) or ASSEP (Association d’Epargne-Pension)