EUROPEAN COMMISSION Brussels, 29.6.2017 COM(2017) 343 final 2017/0143(COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on a pan-European Personal Pension Product (PEPP) (Text with EEA relevance) {SWD(2017) 243 final}

{SWD(2017) 244 final}



EXPLANATORY MEMORANDUM 1.CONTEXT OF THE PROPOSAL 1.1.Reasons for and objectives of the proposal Across the European Union (EU), individuals who wish to supplement their pensions are saving for retirement in many different ways, for example by investing in real estate, life insurance and other long-term investment products. Personal pension products are another option. However, personal pension markets are unequally developed and personal pension products are unequally affordable across the European Union (EU). People who wish to save more for retirement need a greater choice of suitable personal pension products that rely on capital markets-based investments. An additional public policy challenge is the need to ensure the long-term sufficiency of retirement income from a combination of state, occupational and personal pensions. Market fragmentation prevents personal pension providers from maximising risk diversification, innovation and economies of scale. This reduces choice and attractiveness and leads to increased costs for pension savers. It also contributes to a lack of liquidity and depth in the capital markets compared with other jurisdictions such as the United States of America, where pension funds play a bigger role as institutional investors. Moreover, some existing personal pension products have insufficient features and their availability and cross-border portability is limited, with hardly any crossborder activity by suppliers or savers. An EU initiative on personal pensions could therefore complement the current divergent rules at EU and national level by adding a pan-European framework for pension, for individuals who wish to use this additional saving option. This framework will not replace or harmonise existing national personal pension schemes. It will offer individuals a new voluntary framework for saving by ensuring sufficient consumer protection with regard to the essential features of the product. At the same time, the framework will be flexible enough to enable different providers to tailor products to suit their business model. It will encourage providers to invest in a sustainable manner in the real economy over the long term, particularly in infrastructure projects and corporates, thus matching the long-term liabilities under the PEPP. Overall, the proposal will create a quality label for EU personal pension products and increase trust among consumers. It will lead to consumers having greater choice between providers and ensure a level playing field for providers. The proposal may also contribute to the creation of a single market for personal pensions and encourage competition between providers to the benefit of consumers. The Commission’s Action Plan on Capital Markets Union of September 2015 stated that, ‘an “opt in” European Personal Pension could provide a regulatory template, based on an appropriate level of consumer protection, that pension providers could elect to use when offering products across the EU. A larger, “third pillar” European pension market would also support the supply of funds for institutional investors and investment into the real economy’. In the action plan, the Commission also announced that it will ‘assess the case for a policy framework to establish a successful European market for simple, efficient and competitive personal pensions, and determine whether EU legislation is required to underpin this market’. The European Parliament, in its Resolution of 19 January 2016, expressed concern about the lack of available and attractive risk-appropriate (long-term) investments and cost-efficient and suitable savings products for consumers. While reiterating the need for diversity in investor and consumer choices, the European Parliament stressed that ‘an environment must be fostered that stimulates financial product innovation, creating more diversity and benefits for the real economy and providing enhanced incentives for investments, and that may also contribute to the delivery of adequate, safe and sustainable pensions, such as, for example, the development of a pan-European Pension Product (PEPP), with a simple transparent design’. In June 2016, the European Council called for ‘swift and determined progress to ensure easier access to finance for business and to support investment in the real economy by moving forward with the Capital Markets Union agenda.’ In September 2016, in its Communication Capital Markets Union — Accelerating Reform, in light of the strong support expressed by the European Parliament, Council and stakeholders for the Capital Markets Union action plan, that it will ‘consider proposals for a simple, efficient and competitive EU personal pension product’. Subsequently, in its Communication Mid-term Review of the Capital Markets Union Action Plan, the Commission announced ‘a legislative proposal on a pan-European Personal Pension Product (PEPP) by end June 2017. This will lay the foundations for a safer, more costefficient and transparent market in affordable and voluntary personal pension savings that can be managed on a pan-European scale. It will meet the needs of people wishing to enhance the adequacy of their retirement savings, address the demographical challenge, complement the existing pension products and schemes, and support the cost-efficiency of personal pensions by offering good opportunities for long-term investment of pension savings’. This proposal for a PEPP framework comprises a complementary voluntary scheme alongside national regimes, enabling providers to create personal pension products on a pan-European scale. It aims to channel more household savings away from traditional instruments, such as savings deposits, towards the capital markets. The proposal aims to ensure that consumers are fully aware of the key features of the product. Regarding investment policy, consumers will have a choice between a safe default investment option and alternative options with different risk-return profiles. Consumers will benefit from EU-wide portability, full transparency of the costs of the PEPP and the ability to switch providers (with switching costs capped). From the point of view of providers, the proposal intends to enable a broad range of them to offer the PEPP (banks, insurers, asset managers, occupational pension funds, investment firms) and to ensure a level playing field. The PEPP could be provided online, including advice, and would not require a network of branches, allowing easier market access. Passporting rules would help providers enter new national markets. Standardising the key features should also reduce providers’ costs and help them pool contributions from different national markets in order to channel assets into EU-wide investments. The flexibility around other features, such as the conditions for accumulating pension contributions, is intended to enable consumers to benefit from national tax incentives available in their Member State of residence, provided that the providers adapt the PEPPs to the national criteria for tax incentives. In order to encourage Member States to grant tax relief on the PEPP, the Commission has adopted a Recommendation on the tax treatment of personal pension products, including the pan-European Personal Pension Product, alongside this proposal. 1.2.Consistency with existing policy provisions in the policy area In the area of pensions, the EU has adopted the following major initiatives in recent years:

·1998 Directive on safeguarding the supplementary pension rights of employed and self-employed persons moving within the Community; ·2014 Directive on the portability of supplementary pension rights, aimed at promoting worker mobility by reducing the obstacles created by certain rules on occupational pensions; ·2016 Directive on institutions for occupational retirement provision (‘IORP2’), which strengthens governance, information disclosure and cross-border requirements for occupational pension funds. Further non-legislative measures taken by the Commission in the pensions area include the ‘Track and trace your pension in Europe project’, proposing the creation of a European tracking service to help people track information about their pension entitlements across Member States, and the RESAVER project. The proposal for a PEPP framework does not affect the three directives mentioned above, as they target occupational pensions. With regard to non-legislative initiatives, the PEPP framework could be integrated into future projects. 1.3.Consistency with other EU policies The proposal aims to increase the take-up of personal pensions in the EU. It is consistent with the EU policy of encouraging complementary retirement savings in order to achieve pension adequacy, as set out in the Commission White Paper on pensions in 2012. In line with this, the 2015 Pension Adequacy Report concluded that increased entitlements from supplementary (that is, occupational and personal) retirement savings could, alongside other measures, mitigate the impact of lower pensions from public schemes in some Member States. The 2017 Annual Growth Survey reported that broad coverage (i.e. wide availability and increased uptake) of supplementary pensions could play a key role in retirement income provision, in particular where public pensions may be inadequate, and should be promoted by appropriate means, depending on the national context. The proposal is in line with EU policy on strengthening consumer protection, in particular by developing a low-risk default investment option, requiring full transparency to PEPP savers, specifically on costs, and allowing savers to switch provider with a cap on switching costs. 2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 2.1.Legal basis The legal basis for this proposal is Article 114 of the Treaty on the Functioning of the European Union (TFEU), which allows the adoption of measures for the approximation of national provisions having as their object the establishment and functioning of the internal market. Currently, the functioning of the internal market for personal pensions is impeded by the high degree of fragmentation between national markets and the limited degree of portability of personal pension products. This can make it difficult for individuals to make use of their basic freedoms. For example, they may be prevented from taking up a job or retiring in another Member State. In addition, the possibility for providers to use the freedom of establishment and the freedom to provide services is hampered by the lack of standardisation of existing personal pension products. The proposal will create a largely standardised pan-European product, available in all Member States, that will empower consumers to make full use of the internal market by enabling them to transfer their pension rights abroad and offering them a greater choice of providers, including in other EU countries. The proposal harmonises the core features of the PEPP: authorisation, distribution (including information provision and advice), investment policy, switching provider and cross-border provision and portability. The proposal is complemented by the Recommendation on the tax treatment of personal pension products, including the pan-European Personal Pension Product. This is aimed at avoiding that in certain Member States PEPPs fall outside the scope of national tax incentives, if the core product features do not match all national criteria for tax relief. 2.2.Subsidiarity (for non-exclusive competence) Under Article 4 TFEU, EU action for completing the internal market must be appraised in the light of the subsidiarity principle set out in Article 5(3) of the Treaty on European Union (TEU). It must be assessed whether the objectives of the proposal could not be achieved by the Member States in the framework of their national legal systems (necessity test) and, by reason of their scale and effects, are better achieved at EU level (effectiveness test). First, regarding the necessity test, the uncoordinated efforts of Member States, whether at central, regional or local level, cannot remedy the legal fragmentation in product regulation, which results in extra compliance costs for providers and discourages cross-border activity. For example, EU legislation on distribution requirements for financial products (such as the Insurance Distribution Directive, the Markets in Financial Instruments Directive (MiFID II) and the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulationdoes not apply to most personal pension products, so such products fall within the scope of national legislation. With markets for personal pension products left exclusively to national regulation, information asymmetry occurs between providers and savers, particularly in a cross-border context. Accordingly, savers may be insufficiently aware of the actual performance of their personal pension products, or even unable to switch providers. If providers at national level do not give savers sufficient information, this can reduce trust in personal pension product providers and result in fewer transactions, lower levels of engagement with pension provision and poor decision-making by savers. The portability of personal pension products is a concern for people moving to another EU country while trying to maintain the same product and provider. Currently, when moving to another Member State, people have no choice but to search for a new product offered by a provider in the new Member State with substantially different rules, instead of continuing to save in their former Member State. National tax incentives encourage people to save for retirement and are key to promoting the take-up of personal pensions. Losing such tax benefits when moving to another Member State is a major barrier to the cross-border portability of personal pension products. Member States acting alone cannot remedy such portability issues. Second, regarding the effectiveness test, action at EU level can help remedy the consequences of market fragmentation, particularly in terms of costs. If no EU action is taken, asset pools are likely to remain small and limited to national borders, without economies of scale, and competition would remain limited to domestic providers. Individual savers are therefore unlikely to benefit from the lower prices and better product ranges that would result from efficiency gains and returns on large asset pools. Fragmentation is expensive also for providers: divergence in national regulation means extra compliance costs. There are limited incentives for providers to offer products cross-border, mainly due to high costs. By contrast, a standardised EU personal pension product is expected to cut providers’ costs by creating larger asset pools. For example, a study has shown that spreading fixed costs over a larger pool of members could reduce administration costs by 25 %. The creation of an EU legislative framework for personal pensions would reduce providers’ costs by creating economies of scale, particularly in relation to investment and administration. An EU personal pension framework would help providers operate across borders as it would allow them to centralise certain functions at EU level (rather than relying on local operations or outsourcing). Standardisation would make it easier for providers to offer a pension solution to corporate clients active in several Member States and looking for an EU-wide personal pension for their employees. This could also lead to efficiency gains in distribution, for example by using digital channels to sell personal pensions. An EU legislative framework for personal pensions could be accompanied by EU policy work in the area of financial technology.

Increasing the take-up of personal pensions could help secure adequate replacement rates in the future as a supplement to state-based and occupational pensions. A greater choice of safe and high quality personal pension products benefits all workers, whether employed or self-employed, and whether they have taken up a job in another Member State or not. An EU single market for personal pensions would make the product accessible to a wider range of people. Minimum product requirements laid down in EU rules would create transparency, simplicity and safety for PEPP savers. In addition, it would accommodate the increasing mobility of EU citizens and the increasingly flexible nature of work. 2.3.Proportionality Under the principle of proportionality, the content and form of EU action should not exceed what is necessary to achieve the objectives of the Treaties. In principle, it is already possible to offer personal pension products in all Member States. However, compared with their market potential, they do not contribute to channelling enough savings towards capital markets and to achieving the Capital Markets Union. In addition, the features of some existing personal pension products are insufficient, as are the development of cross-border portability and the provision of personal pension products. The policy options set out in the impact assessment accompanying this proposal include taking no action at EU level, the PEPP framework and harmonising national personal pension regimes. The ‘no EU action’ scenario would not achieve the above objectives. Conversely, the harmonisation of national regimes would make it possible to achieve the objectives but would also require full harmonisation of very different national situations — personal pensions are well-developed in some Member States and not in others. This option was assessed as too burdensome to reach the objectives. In this context, it is appropriate to propose the PEPP framework for an EU-wide personal pension product that would complement existing national regimes. The impact assessment also evaluated the options for the key features of the PEPP and the tax implications of the recommended features. The key features on distribution, investment policy, provider switching and cross-border elements have been designed to provide sufficient consumer protection and make the framework attractive to future PEPP providers. For example, on distribution, sectorial rules would apply to a large extent. On investment policy, the default option would set a requirement to ensure capital protection but providers would be able to propose alternative investment options. Switching providers would be allowed but the frequency of switching would be restricted. On cross-border portability and supply, the recommended option is based on the technique (currently used by some IORPs) of creating national compartments when changing Member States, but it would be further streamlined for the benefit of PEPP savers. The administrative burden of the PEPP would be limited as the proposal amounts to adding a new product category to the existing portfolio of products provided by insurers, pension funds, investment firms, asset managers and banks, all subject to regulatory oversight by national competent authorities under existing regulatory frameworks. Public authorities might impose new reporting requirements on providers as regards the provision of PEPPs and in particular to monitor the cross-border distribution of PEPPs. This administrative burden should be proportionate to the risks of providing PEPPs on a cross-border basis and would enable market monitoring, ensure appropriate supervision and contribute to consumer protection. 2.4.Choice of the instrument Article 114 TFEU allows the adoption of acts in the form of a regulation or directive. A regulation was selected here for the reasons outlined below. First, as a regulation is directly applicable in all Member States, it would enable a quicker take-up of the PEPP and contribute more rapidly to addressing the need for more pension savings and investments in the Capital Markets Union context. Second, as the proposal would harmonise the core features of the PEPP, they must not be subject to specific national rules, so a regulation is more appropriate than a directive in this case. However, any features that fall outside the scope of the proposal (e.g. accumulation phase conditions) would of course be subject to national rules. 3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS 3.1.Stakeholder consultations The Commission carried out a public consultation on EU personal pensions (including a public hearing) between July and October 2016, which received 585 contributions in total from a broad range of stakeholders. The responses revealed a strong interest from private individuals from all across the EU in simple, transparent and cost-effective personal pension products. The public consultation also requested feedback from professionals on the feasibility of an EU personal pension framework, including a PEPP. Overall, they consider that the PEPP framework represents a good opportunity to develop a new pension product, and some professionals are already preparing to launch a PEPP. 3.2.Collection and use of expertise The proposal is based on a study carried out by Ernst & Young on behalf of the Commission on a European personal pension framework. The study, completed in June 2017, maps in particular the tax requirements and other legal requirements applicable across all Member States, and assesses the market potential for a PEPP. The main conclusion of the study is that tax regimes across the EU are very diverse, and this requires sufficient flexibility in an EU framework on the PEPP to adapt to national criteria. In addition, the study concludes that the PEPP would see the personal pension market grow in value from EUR 0.7 trillion to EUR 2.1 trillion by 2030 with the PEPP, versus EUR 1.4 trillion without the PEPP (assuming the PEPP would benefit from the existing national tax incentives for personal pension products). The proposal is also based on technical advice from the European Insurance and Occupational Pensions Authority (EIOPA) on developing an EU single market for personal pension products. This advice builds on an earlier EIOPA preliminary report Towards a single market for personal pensions. The technical advice recommends: ·choosing the PEPP over harmonisation of national regimes; and ·defining key PEPP features at EU level, while leaving certain other tax-sensitive features to national law. As part of the key features, the technical advice recommends in particular the inclusion of a safe default investment option and detailed requirements on transparency of information to PEPP savers. The proposal is in line with these recommendations.

Finally, the proposal builds on the following: ·OECD study Stocktaking of the tax treatment of funded private pension plans in OECD and EU countries; ·Commission-OECD project on taxation, financial incentives and retirement savings; ·OECD study Core Principles of Private Pension Regulation; and ·Oxera study on the position of savers in private pension products across 14 EU Member States. 3.3.Impact assessment The PEPP proposal is supported by a positive opinion issued by the Regulatory Scrutiny Board (RSB) on 22 May 2017, after a first negative opinion issued on 2 May 2017.In its comments, the RSB suggested that the impact assessment should focus more on analysing the key product features of the PEPP, and explained how the PEPP features compare to those of existing personal pension products. The RSB also requested a more detailed quantification of the impact of the PEPP option and clarification of the underlying assumptions. The final version of the impact assessment addresses these points by: ·detailing the various options for the PEPP features; ·explaining how they take inspiration from existing personal pension products with the highest penetration index; and ·quantifying the extra volumes generated by the launch of the PEPP on the personal pension market and the effect on capital markets. The proposal is in line with the conclusions of the impact assessment. The general policy alternatives examined in the impact assessment consisted of the following options: ·no EU action; ·PEPP framework; or ·harmonising the national personal pension regimes. Under the first option, the shortcomings identified (fragmentation of national capital markets would remain, insufficient features of existing personal pension products, and limitations to cross-border portability and provision) would still exist. By contrast, the third option would address these shortcomings. However, this would also involve harmonising national tax regimes for personal pensions, which would require the unanimous support of Member States. In addition, there would be significant compliance costs for providers: first, they would have to adapt all their personal pension products to the new regime. In addition, on an ongoing basis, this regime may differ significantly from the sectorial regimes under which providers are distributing their other financial products. The impact assessment therefore concludes that the second option is the preferred policy choice as it offers an additional harmonised pan-European framework that complements the existing national regimes and can overcome the shortcomings identified by using targeted solutions that avoid excessive compliance costs. The PEPP framework would have a positive economic impact. According to the EY study, it would result in the assets under management in the personal pension product market growing from EUR 0.7 trillion to EUR 2.1 trillion by 2030 with the PEPP versus EUR 1.4 trillion without the PEPP, assuming that tax incentives are granted to the PEPP.

It would also have a positive social impact as more people would be able to complement other sources of income in retirement with PEPP and thus improve the adequacy of their pensions. It would in particular have a greater impact for workers in non-standard employment, self-employed and mobile workers who have not sufficient or no access to state or occupational pension systems. The positive social impact would be higher in Member States with a limited choice and limited take-up of personal pension products at present. No significant environmental impact is expected, although encouraging providers to take into account environmental, social and governance factors in their investments (associated with disclosure requirements) can have a positive effect in terms of sustainability. 3.4.Fundamental rights The proposal respects the fundamental rights and observes the principles recognised by the Charter of Fundamental Rights of the European Union, in particular the right to the protection of personal data, the right to property, the freedom to conduct a business and the principle of equality between men and women. It contributes to the objectives of Article 38 of the Charter which provides for a high level of consumer protection. 4.BUDGETARY IMPLICATIONS The proposal has implications for the EU budget. In particular, the additional tasks for the European supervisory authorities (ESAs) will require an increase in resources as well as certain operational investments. These tasks include: ·authorisation of PEPPs; ·the development of additional guidance; or ·a central register for all authorised PEPPs. Costs of EUR 1 000 000 have been estimated for 2019, including a one-time investment for operational matters, and will total around EUR 1 200 000 per year by 2021. Under the current co-financing arrangements of the ESAs, 40 % of this funding will be included in the EU budget and will, as such, not go beyond what is set out in the current multiannual financial framework that runs until 2020. 5.OTHER ELEMENTS 5.1.Implementation plans and monitoring, evaluation and reporting arrangements After the Regulation has entered into force, the Commission will monitor key mid-term performance indicators for the objectives. These indicators include: ·the total uptake — in terms of assets under management — of personal pension products and the geographical and sectorial distribution of PEPP providers and investments in PEPPs (objective of increasing investment in the EU and contributing to completing the CMU); ·the number of PEPP registrations and the relative share of personal pension products (including national products and the PEPP) as a percentage of households’ financial assets (objective of improving the product features on the personal pension market); and ·the number of providers using a passport for cross-border activity and the relative share of PEPPs with more than one national compartment as compared to all personal pension products (objective of increasing the cross-border provision and portability of personal pension products). The data collected by the ESAs in particular could help monitor the PEPP performance indicators. In addition, the Commission will assess to what extent the Commission recommendation for preferential tax treatment for the PEPP has been taken up by Member States through national legislation. The proposal includes an evaluation five years after the date of application of the Regulation.

5.2.Detailed explanation of the specific provisions of the proposal The proposed Regulation on a pan-European Personal Pension Product has 11 chapters. Apart from the first chapter (General provisions) and last chapter (Final provisions), the structure follows the life cycle of the product. Chapter I outlines the objectives of the proposed Regulation, which include: ·raising more capital and channelling it towards European long-term investments in the real economy; ·offering enhanced product features so that citizens benefit from a simple, safe and cost-effective personal pension product while being able to choose from different types of PEPP providers; and ·encouraging PEPP cross-border provision and portability. Chapter I contains the definitions of important concepts for the proposed Regulation, including ‘pan-European Personal Pension Product’, ‘PEPP account’, ‘retirement benefits’, ‘accumulation phase’, ‘decumulation phase’, ‘provider’ and ‘distributor of a PEPP’, ‘portability of the PEPP’ and ‘switching providers’. The Article on applicable rules explains the interaction between the proposed Regulation, the contractual provisions for PEPP and national rules for regulating the subject matter. Chapter II introduces the principle that only financial undertakings already authorised at EU level by the competent authorities under the applicable sectorial legal instrument, would be eligible to apply for authorisation to provide PEPPs (i.e. to create and distribute them). The authorisation to act as a PEPP provider, i.e. to use the ‘PEPP’ label for personal pension products, will be granted by a single EU authority, EIOPA. The designation ‘PEPP’ or ‘pan-European Personal Pension Product’ in relation to a personal pension product may only be used where the personal pension product has been authorised by EIOPA to be provided under the designation ‘PEPP’. Existing personal pension products may be converted into PEPPs following authorisation by EIOPA, which must consult the competent supervisory authority of the financial undertaking before deciding whether to reject or approve its application. In addition, Chapter II provides rules so that PEPPs might also be distributed by financial undertakings that have not created them. This can be done by financial undertakings that have received a specific authorisation for distribution by their national competent authorities, and by insurance, reinsurance and ancillary insurance intermediaries registered as such under Directive 2016/97/EU (the Insurance Distribution Directive). Chapter III establishes the allocation of prerogatives between the competent authorities of home and host Member States in allowing the freedom to provide services and the freedom of establishment by PEPP providers. Acknowledging the concerns of some Member States about a possible uneven playing field due to the different prudential regimes to which the different types of potential PEPP providers are subject to, the ‘passporting’ regime would mitigate the competitive effects of the different prudential regimes to a large extent, insofar as it relies on the competent authorities of home and host Member States along with the ‘label’ authorisation entrusted to EIOPA. Chapter III also includes the provisions on portability. This enables PEPP savers who change their domicile by moving to another Member State to continue paying into a PEPP that they have already taken out with a provider in the original Member State. In such a case, PEPP savers are entitled to keep all the advantages and incentives connected with continuous investment in the same PEPP. The mechanism behind the portability service envisages opening a new compartment within each individual PEPP account. This compartment corresponds to the legal requirements and conditions for using tax incentives fixed at national level for the PEPP by the Member State to which the PEPP saver moves. The mechanism for opening new compartments, transferring the accumulated rights between these compartments and providing information about this option is laid down in the proposed Regulation and follows a staggered approach. During the first three years of application of the Regulation, PEPP providers will have to provide information on the available compartments. Afterwards, PEPP savers will be entitled to open national compartments that cover all Member States’ regimes. Chapter IV aims to achieve the greatest possible transparency, in particular for potential PEPP savers, on PEPP features. The rules clarify in particular that all documents and information on PEPP will be provided to prospective PEPP savers and PEPP beneficiaries electronically –electronic distribution is the default option. Upon request, PEPP providers and distributors must also provide those documents and information free of charge in a durable medium. In terms of advice, PEPP providers will be expected to conduct a suitability and appropriateness test of potential PEPP savers, although savers may waive their right to receive advice if they opt for the default option. The cornerstone of providing pre-contractual information is the PEPP key information document. Its form, content and conditions of provision are described in detail in the proposed Regulation. On the information provided during the term of the PEPP contract, the provider must produce a ‘PEPP Benefit Statement’. This will include information on: ·the accrued entitlements or accumulated capital; ·full or partial guarantees under the PEPP scheme; and ·if applicable, the nature of the guarantee and mechanisms to protect accrued individual entitlements.

Chapter V deals with the accumulation phase of the PEPP, including investment rules for PEPP providers and PEPP savers. The provisions applicable to PEPP providers are derived from the ‘prudent person rule’ and provide a safe and reliable framework for investment policies. As to PEPP savers, they are to be offered up to five investment options by PEPP providers, one of them being a default investment option that ensures that the PEPP saver recoups at least the capital invested. All investment options must be designed by PEPP providers on the basis of proven risk mitigation techniques that ensure sufficient protection for PEPP savers. Having concluded the PEPP contract, PEPP savers must select an investment option and must be able to change it free of charge once in every five years of accumulation. Scope is left to Member States as regards all other conditions relating to the accumulation phase. Such conditions may include: ·age limits for starting the accumulation phase; ·minimum duration of the accumulation phase; ·maximum and minimum amount of in-payments and their continuity; and ·conditions for redemption before retirement age in case of particular hardship. Chapter VI establishes the mechanism for appointing a depositary in the case of a PEPP scheme where PEPP savers and PEPP beneficiaries fully bear the investment risk. The provisions cover the safekeeping of assets, the oversight duties of the depositary and its liability. The proposed Regulation requires that procedures be set up to allow customers and other interested parties, especially consumer associations, to lodge complaints against PEPP providers and distributors. In all cases, complainants must receive replies. Appropriate mechanisms for impartial and independent out-of-court complaint and redress procedures for the settlement of disputes between PEPP savers and PEPP providers or distributors must also be put in place. The proposed Regulation includes the possibility for PEPP providers to cover the risk of death and other biometric risks. Chapter VII regulates the switching of PEPP providers. Following a request by the PEPP saver, any positive balance will be transferred from a PEPP account held with the transferring provider to a new PEPP account opened with the receiving provider, and the former PEPP account will be closed. The switching service may be provided by PEPP providers established in the same Member State (domestic switching) or in different Member States (cross-border switching). A ceiling is envisaged for the total fees and charges applied by the transferring PEPP provider to the PEPP saver for the termination of the PEPP account held with it. Chapter VIII leaves most of the PEPP conditions related to the decumulation phase to be determined by Member States — in particular: ·setting the retirement age; ·a mandatory link between reaching retirement age and the start of the decumulation phase; ·a minimum period of belonging to a PEPP scheme; and ·a maximum period before reaching retirement age for joining a PEPP scheme. On the forms of out-payments (e.g. annuities, lump sums, income drawdown payments), by giving PEPP providers, PEPP savers and PEPP beneficiaries the freedom to contractually determine the form(s), the proposal imposes this flexibility on Member States as a mandatory condition, which may have an impact on the availability of national tax incentives for the PEPPs in some Member States. Chapter IX divides the supervisory responsibilities between EIOPA and the national competent authorities. EIOPA is required to monitor pension schemes established or distributed in the territory of the EU to verify that they do not use the designation ‘PEPP’ or infer that they are a PEPP unless they are authorised under the proposed Regulation. Chapter X describes which infringements of the provisions of the proposed Regulation may lead to penalties, how national competent authorities may impose these penalties and how infringements and penalties should be reported. Chapter XI confers on the European Commission the power to adopt delegated acts in the areas of:

·conflicts of interest; ·inducements; ·selling PEPPs with and without advice; ·product oversight and governance requirements; ·provision of information during the contract term; and ·reporting to national authorities and investment options. The Commission will also adopt regulatory technical standards on the content and provision of the key information document and implement technical standards on a standardised presentation format for the PEPP Benefit Statement. The Commission is required to evaluate the Regulation five years after the date of entry into force of the Regulation. The evaluation would notably look at how its rules are working and the experience acquired in applying them, the extent to which the designation "PEPP" has been used by PEPP providers, the geographical and sectorial distribution of PEPP providers and investments in PEPPs, the impact of this Regulation on the personal pensions market, the appropriateness of the information requirements under Chapter IV, the appropriateness of complementing this Regulation with provisions on incentives for investing in PEPPs, the existence of any barriers that may have impeded investment into personal pension products using the designation "PEPP", including the impact on PEPP savers of other Union law, the level of fees and charges required by PEPP providers for opening new compartments within PEPP savers' individual PEPP accounts, and the impact of PEPP-related investment decisions on environmental, social and governance factors. 2017/0143 (COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on a pan-European Personal Pension Product (PEPP) (Text with EEA relevance) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 thereof, Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national parliaments, Having regard to the opinion of the European Economic and Social Committee, Acting in accordance with the ordinary legislative procedure, Whereas:

(1)EU households are amongst the highest savers in the world, but the bulk of these savings are held in bank accounts with short maturities. More investment into capital markets can help meet the challenges posed by population ageing and low interest rates. (2)Personal pensions are important in linking long-term savers with long-term investment opportunities. A larger, European market for personal pensions will support the supply of funds for institutional investors and investment into the real economy. (3)Currently, the functioning of the internal market for personal pensions is impeded by the high degree of fragmentation between national markets and the limited degree of portability of personal pension products. This can result in difficulties for individuals to make use of their basic freedoms. For instance, they may be prevented from taking up a job or retiring in another Member State. In addition, the possibility for providers to use the freedom of establishment and the freedom to provide services is hampered by the lack of standardisation of existing personal pension products. (4)The Capital Markets Union (CMU) will help mobilise capital in Europe and channel it to all companies, including small and medium enterprises, infrastructure and long term sustainable projects that need it to expand and create jobs. One of the main objectives of the CMU is to increase investment and choices for retail investors by putting European savings to better use. (5)As announced in the Commission's Action Plan on building a CMU, in September 2015, "the Commission will assess the case for a policy framework to establish a successful European market for simple, efficient and competitive personal pensions, and determine whether EU legislation is required to underpin this market." (6)In its Resolution of 19 January 2016, the European Parliament stressed that "an environment must be fostered that stimulates financial product innovation, creating more diversity and benefits for the real economy and providing enhanced incentives for investments, and that may also contribute to the delivery of adequate, safe and sustainable pensions, such as, for example, the development of a pan-European Pension Product (PEPP), with a simple transparent design". (7)In its conclusions of 28 June 2016, the European Council called for "swift and determined progress to ensure easier access to finance for business and to support investment in the real economy by moving forward with the Capital Markets Union agenda". (8)In its Communication of 14 September 2016 Capital Markets Union – Accelerating Reform, the Commission announced that it "will consider proposals for a simple, efficient and competitive EU personal pension product [..] Options under consideration include a possible legislative proposal which could be tabled in 2017." (9)In its Communication Mid-Term Review of the Capital Markets Union Action Plan, the Commission announced "a legislative proposal on a pan-European Personal Pension Product (PEPP) by end June 2017. This will lay the foundations for a safer, more cost-efficient and transparent market in affordable and voluntary personal pension savings that can be managed on a pan-European scale. It will meet the needs of people wishing to enhance the adequacy of their retirement savings, address the demographical challenge, complement the existing pension products and schemes, and support the cost-efficiency of personal pensions by offering good opportunities for long-term investment of pension savings". (10)Among personal pension products, the development of a PEPP will contribute to increasing choices for retirement saving and establish an EU market for PEPP providers. It will provide households with better options to meet their retirement goals. (11)A legislative framework for a PEPP will lay the foundations for a successful market in affordable and voluntary retirement-related investments that can be managed on a pan-European scale. By complementing the existing pension products and schemes, it will contribute to meeting the needs of people wishing to enhance the adequacy of their retirement savings, addressing the demographical challenge and providing a powerful new source of private capital for long-term investment. This framework will not replace or harmonise existing national personal pension schemes. (12)The Regulation harmonises a set of core features for the PEPP, which concern key elements such as distribution, investment policy, provider switching, or cross-border provision and portability. The harmonisation of these core features will improve the level playing field for personal pension providers at large and help boost the completion of the CMU and the integration of the internal market for personal pensions. It will lead to the creation of a largely standardised pan-European product, available in all Member States, empowering consumers to make full use of the internal market by transferring their pension rights abroad and offering a broader choice between different types of providers, including in a cross-border way. As a result of fewer barriers to the provision of pension services across borders, a pan-European Personal Pension Product will increase competition between providers on a pan-European basis and create economies of scale that should benefit savers. (13)Article 114 TFEU allows the adoption of acts both in the shape of Regulations or Directives. The adoption of a Regulation has been preferred as it would become directly applicable in all Member States. Therefore, a Regulation would allow a quicker uptake of the PEPP and contribute more rapidly to address the need for more pension savings and investments in the CMU context. Since this Regulation is harmonising the core features of the PEPPs, they do not have to be subject to specific national rules, so a Regulation appears better suited than a Directive in this case. On the contrary, the features which are out of the scope of the Regulation (e.g. accumulation phase conditions) are subject to national rules. (14)PEPP providers should have access to the whole Union market with one single product authorisation issued by the European Insurance and Occupational Pensions Authority ("EIOPA"), on the basis of a single set of rules. (15)The single PEPP passport will ensure the creation of a single market for PEPP. (16)In order to ensure a high quality of service and effective consumer protection, home and host Member States should closely cooperate in the enforcement of the obligations set out in this Regulation. Where PEPP providers and distributors pursue business in different Member States under the freedom to provide services, the competent authority of the home Member State should be responsible for ensuring compliance with the obligations set out in this Regulation, because of its closer links with the PEPP provider. In order to ensure fair sharing of responsibilities between the competent authorities from the home and the host Member States, if the competent authority of a host Member State becomes aware of any breaches of obligations occurring within its territory, it should inform the competent authority of the home Member State which should then be obliged to take the appropriate measures. Moreover, the competent authority of the host Member State should be entitled to intervene if the home Member State fails to take appropriate measures or if the measures taken are insufficient. (17)In the case of the establishment of a branch or a permanent presence in another Member State, it is appropriate to distribute responsibility for enforcement between home and host Member States. While responsibility for compliance with obligations affecting the business as a whole – such as the rules on professional requirements – should remain with the competent authority of the home Member State under the same regime as in the case of provision of services, the competent authority of the host Member State should assume responsibility for enforcing the rules on information requirements and conduct of business with regard to the services provided within its territory. However, where the competent authority of a host Member State becomes aware of any breaches of obligations occurring within its territory with respect to which this Directive does not confer responsibility on the host Member State, a close cooperation demands that that authority informs the competent authority of the home Member State so that the latter takes the appropriate measures. Such is the case in particular as regards breaches of the rules on good repute, professional knowledge and competence requirements. Moreover, in view of protecting consumers, the competent authority of the host Member State should be entitled to intervene if the home Member State fails to take appropriate measures or if the measures taken are insufficient. (18)The competent authorities of the Member States should have at their disposal all means necessary to ensure the orderly pursuit of business by PEPP providers and distributors throughout the Union, whether pursued in accordance with the freedom of establishment or the freedom to provide services. In order to ensure the effectiveness of supervision, all actions taken by the competent authorities should be proportionate to the nature, scale and complexity of the risks inherent in the business of a particular provider or distributor, regardless of the importance of the provider or distributor concerned for the overall financial stability of the market. (19)The pan-European dimension of the PEPP can be developed not only at the level of the provider, through the possibilities for its cross-border activity, but also at the level of the PEPP saver – through the portability of the PEPP, thus contributing to the safeguarding of personal pension rights of persons exercising their right to free movement under Articles 21 and 45 TFEU. Portability involves the PEPP saver changing residence to another Member State without changing PEPP providers, whereas the switching of PEPP providers does not necessarily involve a change of residence. (20)A PEPP should comprise national compartments, each of them accommodating personal pension product features allowing that contributions to the PEPP qualify for incentives. At the level of the individual PEPP saver, a first compartment should be created upon opening of a PEPP.

(21)In order to allow a smooth transition for PEPP providers, the obligation of providing PEPPs comprising compartments for each Member State will apply three years after the entry into force of this Regulation. However, upon launching a PEPP, the provider should provide information on which national compartments are immediately available, in order to avoid a possible misleading of consumers. (22)Taking into account the nature of the pension scheme established and the administrative burden involved, PEPP providers and distributors should provide clear and adequate information to potential PEPP savers and PEPP beneficiaries to support their decision-making about their retirement. For the same reason, PEPP providers and distributors should equally ensure a high level of transparency throughout the various phases of a scheme comprising pre-enrolment, membership (including pre-retirement) and post-retirement. In particular, information concerning accrued pension entitlements, projected levels of retirement benefits, risks and guarantees, and costs should be given. Where projected levels of retirement benefits are based on economic scenarios, that information should also include an unfavourable scenario, which should be extreme but plausible. (23)Before joining a PEPP scheme, potential PEPP savers should be given all the necessary information to make an informed choice. (24)In order to ensure optimal product transparency, PEPP manufacturers should draw up the PEPP key information document for the PEPPs that they manufacture before the product can be distributed to PEPP savers. They should also be responsible for the accuracy of the PEPP key information document. The PEPP key information document should replace and adapt the key information document for packaged retail and insurance-based investment products under Regulation (EU) No 1286/2014 of the European Parliament and of the Council which would not have to be provided for PEPPs. (25)In order to ensure widespread dissemination and availability of PEPP key information documents, this Regulation should provide for publication by the PEPP manufacturer of PEPP key information documents on its website. (26)Pension product calculators are already being developed at national level. However, in order for the calculators to be as useful as possible to consumers, they should cover the costs and fees charged by the various PEPP manufacturers, together with any further costs or fees charged by intermediaries or other parts of the investment chain not already included by the PEPP manufacturers. (27)The details of the information to be included in the PEPP key information document in addition to elements already provided for in the key information document for packaged retail and insurance-based investment products under Regulation (EU) No 1286/2014 and the presentation of this information should be further harmonised through regulatory technical standards that complement the regulatory technical standards laid down by Commission delegated Regulation of 8 March 2017, taking into account existing and ongoing research into consumer behaviour, including results from testing the effectiveness of different ways of presenting information with consumers. (28)The PEPP key information document should be clearly distinguishable and separate from any marketing communications. (29)PEPP providers should draw up a Pension Benefit Statement addressed to PEPP savers, in order to present them with key personal and generic data about the PEPP scheme and to ensure continuous information on it. The Pension Benefit Statement should be clear and comprehensive and should contain relevant and appropriate information to facilitate the understanding of pension entitlements over time and across schemes and serve labour mobility. (30)PEPP providers should inform PEPP savers sufficiently in advance before retirement about their pay-out options. Where the retirement benefit is not paid out as a lifetime annuity, members approaching retirement should receive information about the benefit payment products available, in order to facilitate financial planning for retirement. (31)During the phase when retirement benefits are paid, PEPP beneficiaries should continue to receive information on their benefits and corresponding pay-out options. This is particularly important when a significant level of investment risk is borne by PEPP beneficiaries in the pay-out phase. PEPP beneficiaries should also be informed of any reduction in the level of benefits due, prior to the application of any such reduction, after a decision which will result in a reduction has been taken. As a matter of best practice, PEPP providers are recommended to consult PEPP beneficiaries in advance of any such decision. (32)In order to protect adequately the rights of PEPP savers and PEPP beneficiaries, PEPP providers should be able to opt for an asset allocation that suits the precise nature and duration of their liabilities. Therefore, efficient supervision is required as well as an approach to investment rules that allows PEPP providers sufficient flexibility to decide on the most secure and efficient investment policy, while obliging them to act prudently. Compliance with the prudent person rule therefore requires an investment policy geared to the customers' structure of the individual PEPP provider. (33)By setting the prudent person rule as the underlying principle for capital investment and making it possible for PEPP providers to operate across borders, the redirection of savings into the sector of personal retirement provision is encouraged, thereby contributing to economic and social progress. (34)This Regulation should ensure an appropriate level of investment freedom for PEPP providers. As very long-term investors with low liquidity risks, PEPP providers are in a position to contribute to the development of the CMU by investing in non-liquid assets such as shares and in other instruments that have a long-term economic profile and are not traded on regulated markets, multilateral trading facilities (MTFs) or organised trading facilities (OTFs) within prudent limits. They can also benefit from the advantages of international diversification. Investments in shares in currencies other than those of the liabilities and in other instruments that have a long-term economic profile and are not traded on regulated markets, MTFs or OTFs should therefore not be restricted, in line with the prudent person rule so as to protect the interest of PEPP savers and PEPP beneficiaries, except on prudential grounds. (35)In the context of deepening the CMU, the understanding of what constitutes instruments with a long-term economic profile is broad. Such instruments are non-transferable securities and therefore do not have access to the liquidity of secondary markets. They often require fixed term commitments which restrict their marketability and should be understood to include participation and debt instruments in, and loans provided to, non-listed undertakings. Non-listed undertakings include infrastructure projects, unlisted companies seeking growth, real estate or other assets that could be suitable for long term investment purposes. Low carbon and climate resilient infrastructure projects are often non-listed assets and rely on long term credits for project financing. Considering the long-term nature of their liabilities, PEPP providers are encouraged to allocate a sufficient part of their asset portfolio to sustainable investments in the real economy with long-term economic benefits, in particular to infrastructure projects and corporates. (36)Environmental, social and governance factors, as referred to in the United Nations-supported Principles for Responsible Investment, are important for the investment policy and risk management systems of PEPP providers. PEPP providers should be encouraged to consider such factors in investment decisions and to take into account how they form part of their risk management system. (37)In ensuring compliance with their obligation to develop an investment policy in accordance with the prudent person rule, PEPP providers should be prevented to invest in high-risk and non-cooperative jurisdictions identified by the Financial Action Task Force. (38)In view of the long-term retirement objective of the PEPP, the investment options granted to the PEPP savers should be framed, covering the elements which allow investors to make an investment decision, including the number of investment options they can choose from. After the initial choice made upon the subscription of a PEPP, the PEPP saver should have the possibility to modify this choice at reasonable intervals (every five years), so that sufficient stability is offered to providers for their long-term investment strategy whilst at the same time investor protection is ensured. (39)The default investment option should allow the PEPP saver to recoup the invested capital. The PEPP providers could in addition include an inflation indexation mechanism to at least partly cover inflation. (40)The competent authority should exercise its powers having as its prime objectives the protection of the rights of PEPP savers and PEPP beneficiaries and the stability and soundness of PEPP providers.

(41)Where the PEPP provider is an institution for occupational retirement provision or an investment firm, it should appoint a depositary in relation to the safe-keeping of its assets. This is necessary for protecting consumers, since the sectorial legislation applicable to institutions for occupational retirement provision and investment firms does not provide for the appointment of a depositary. (42)Transparency of costs and fees is essential to develop PEPP savers' trust and allow them to make informed choices. Accordingly, the use of non-transparent pricing methods should be prohibited. (43)In order to fulfil the objectives set out in this Regulation, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of specifying the conditions for the exercise of intervention powers by EIOPA and the competent authorities. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and to the Council. (44)The Commission should adopt draft implementing technical standards developed by the ESAs, through the Joint Committee, with regard to the presentation and the content of specific elements the PEPP key information document not covered by the [PRIIPs KID RTS] in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council, of Regulation (EU) No 1094/2010 of the European Parliament and of the Council and of Regulation (EU) No 1095/2010 of the European Parliament and of the Council. The Commission should complement the technical work of the ESAs by conducting consumer tests of the presentation of the key information document as proposed by the ESAs. (45)Without prejudice to the right of PEPP customers to bring action in the courts, easily accessible, adequate, independent, impartial, transparent and effective alternative dispute resolution (ADR) procedures should be established between PEPP providers or distributors and PEPP customers for resolving disputes arising from the rights and obligations set out in this Regulation. (46)With a view to establishing an efficient and effective dispute resolution procedure, PEPP providers and distributors should put in place an effective complaints procedure that can be followed by their customers before the dispute is referred to be resolved in an ADR procedure or before a court. The complaints procedure should contain short and clearly defined timeframes within which the PEPP provider or distributor should reply to a complaint. ADR entities should have sufficient capacity to engage in an adequate and efficient way in cross-border cooperation with regard to disputes concerning rights and obligations pursuant to this Regulation. (47)In order to find better conditions for their investments, thus also stimulating the competition among PEPP providers, PEPP savers should have the right to switch providers during the accumulation and the decumulation phases, through a clear, quick and safe procedure. (48)The switching process should be straightforward for the PEPP saver. Accordingly, the receiving PEPP provider should be responsible for initiating and managing the process on behalf of the PEPP saver. PEPP providers should be able to use additional means, such as a technical solution, on a voluntary basis when establishing the switching service. (49)Before giving the authorisation for switching, the PEPP saver should be informed of all the steps of the procedure necessary to complete the switching. (50)The cooperation of the transferring PEPP provider is necessary in order for the switching to be successful. Therefore, the receiving PEPP provider should be provided by the transferring PEPP provider with all the information necessary to reinstate the payments on the other PEPP account. However, such information should not exceed what is necessary in order to carry out the switching. (51)In order to facilitate cross-border switching, the PEPP saver should be allowed to ask the new PEPP provider to provide the PEPP saver with information giving details of the new PEPP account, preferably within a single meeting with the new PEPP provider. (52)PEPP savers should not be subject to financial losses, including charges and interest, caused by any mistakes made by either of the PEPP providers involved in the switching process. In particular, PEPP savers should not bear any financial loss deriving from the payment of additional fees, interest or other charges as well as fines, penalties or any other type of financial detriment due to delay in the execution of the switching. (53)PEPP savers should be given the freedom to decide upon subscription of a PEPP about their pay-out choice (annuities, lump sum, or other) in the decumulation phase, but with a possibility to revise their choice once every five years thereafter, in order to be able to best adapt their pay-out choice to their needs when they near retirement. (54)PEPP providers should be allowed to make available to PEPP savers a wide range of decumulation options. This approach would achieve the goal of enhanced take-up of the PEPP through increased flexibility and choice for PEPP savers. It would allow providers to design their PEPPs in the most cost-effective way. It is coherent with other EU policies and politically feasible, as it preserves enough flexibility for Member States to decide about which decumulation options they wish to encourage. (55)Full transparency on costs and fees related to the investment in a PEPP should be guaranteed. A level-playing field between providers would be established, whilst ensuring consumer protection. Comparative information would be available between different products, thus incentivising competitive pricing. (56)Although the ongoing supervision of PEPP providers is to be exercised by the respective competent national authorities, EIOPA should coordinate the supervision with regards to PEPPs, in order to guarantee the application of a unified supervisory methodology, contributing in this way to the pane-European nature of the pension product. (57)EIOPA should cooperate with national competent authorities and facilitate cooperation between them. In this respect, EIOPA should play a role in the power of competent national authorities to apply supervisory measures by providing evidence about PEPP-related infringements. EIOPA should also provide binding mediation in the event of disagreement between competent authorities in cross-border situations. (58)In order to ensure compliance with the provisions of this Regulation by financial undertakings that manufacture PEPP, as well as by financial undertakings and persons that distribute PEPP, and to ensure that they are subject to similar treatment across the Union, administrative sanctions and other measures which are effective, proportionate and dissuasive should be provided. (59)In line with the Commission Communication of 8 December 2010 "Reinforcing sanctioning regimes in the financial services sector" and in order to ensure that the requirements of this Regulation are fulfilled, it is important that Member States take necessary steps to ensure that infringements of this Regulation are subject to appropriate administrative penalties and measures. (60)Although Member States may lay down rules for administrative and criminal penalties for the same infringements, Member States should not be required to lay down rules for administrative penalties for the infringements of this Regulation which are subject to national criminal law. However, the maintenance of criminal penalties instead of administrative penalties for infringements of this Regulation should not reduce or otherwise affect the ability of competent authorities to cooperate, access and exchange information in a timely way with competent authorities in other Member States for the purposes of this Regulation, including after any referral of the relevant infringements to the competent judicial authorities for criminal prosecution.

(61)Competent authorities should be empowered to impose pecuniary sanctions which are sufficiently high to offset the actual or potential profits, and to be dissuasive even for larger financial undertakings and their managers. (62)In order to ensure a consistent application of sanctions across the Union, the competent authorities should take into account all relevant circumstances when determining the type of administrative sanctions or other measures and the level of administrative pecuniary sanctions. (63)In order to ensure that decisions on breaches and penalties by competent authorities have a dissuasive effect on the public at large and to strengthen consumer protection by warning them about PEPPs distributed in infringement of this Regulation, those decisions should be published, provided that the time period for lodging an appeal has passed and no appeal was lodged, unless such disclosure jeopardises the stability of financial markets or an ongoing investigation. (64)In order to detect potential breaches, the competent authorities should have the necessary investigatory powers, and should establish effective mechanisms, to enable reporting of potential or actual breaches. (65)This Regulation should be without prejudice to any provisions in the laws of Member States in respect of criminal offences. (66)Any processing of personal data carried out within the framework of this Regulation, such as the exchange or transmission of personal data by the competent authorities should be undertaken in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council and any exchange or transmission of information by the ESAs should be undertaken in accordance with Regulation (EC) No 45/2001 of the European Parliament and of the Council. (67)Tax incentives can take different forms and play an important role in encouraging the take-up of personal pension products ((PPPs) in a number of Member States. In many Member States the contributions paid for PPPs qualify for some form of tax relief, be it explicit or implicit. (68)This Regulation should not be understood as obliging Member States to apply to PEPPs the same tax rules as they would apply to comparable personal pension products under their national laws. However, in application of the national treatment principle, stemming from Articles 21 and 45 of the TFEU and interpreted by the Court of Justice of the European Union, it should be possible for a PEPP that is objectively comparable to a personal pension product (PPP) distributed in a given Member State to benefit from the same tax relief granted to the PPP in this Member State, if the PEPP saver there is subject to tax. This also applies if the PEPP is provided by a provider from another Member State. (69)Following the launch of the PEPP, Member States are encouraged to take into consideration Commission Recommendation (EU) 2017/… and to extend the benefits of the tax advantages they grant to national PPPs also to the PEPP. (70)An evaluation of this Regulation is to be be carried out, inter alia, by assessing market developments, such as the emergence of new types of PEPPs, as well as developments in other areas of Union law and the experiences of Member States. (71)This Regulation respects fundamental rights and observes the principles recognised in particular by the Charter of the Fundamental Rights of the European Union, in particular the right to the protection of personal data, the right to property, the freedom to conduct a business, the principle of equality between men and women and the principle of a high level of consumer protection. (72)Since the objectives of this Regulation, namely to enhance PEPP saver protection and improve PEPP saver confidence in PEPPs, including where those products are distributed cross-border, cannot be sufficiently achieved by the Member States but can rather, by reason of its effects, be better achieved at Union level the Union may adopt measures, in accordance with principle of subsidiarity as set out in Article 5 of the Treaty of the European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives. HAVE ADOPTED THIS REGULATION: CHAPTER I GENERAL PROVISIONS Article 1

Subject matter This Regulation lays down uniform rules on the authorisation, manufacturing, distribution and supervision of personal pension products that are distributed in the Union under the designation "pan-European Personal Pension product" or "PEPP". Article 2

Definitions

For the purposes of this Regulation, the following definitions apply: (1) "personal pension product" means a product which: (a) is based on a contract between an individual saver and an entity on a voluntary basis; (b) has an explicit retirement objective; (c) provides for capital accumulation until retirement with only limited possibilities for early withdrawal before retirement; (d) provides an income on retirement; (2) "pan-European Personal Pension Product (PEPP)" means a long-term savings personal pension product, which is provided under an agreed PEPP scheme by a regulated financial undertaking authorised under Union law to manage collective or individual investments or savings, and subscribed to voluntarily by an individual PEPP saver in view of retirement, with no or strictly limited redeemability; (3) "PEPP saver" means: (a) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU of the European Parliament and of the Council; (b) a customer within the meaning of Directive 2002/92/EC of the European Parliament and of the Council, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of Directive 2014/65/EU; (4)"PEPP scheme" means a contract, an agreement, a trust deed or rules stipulating which retirement benefits are granted and under which conditions on the basis of an individual retirement savings plan agreed with a PEPP provider; (5) "PEPP account" means a personal pension account held in the name of a PEPP saver or a PEPP beneficiary which is used for the execution of transactions allowing the PEPP saver to contribute periodically sums towards his retirement and the PEPP beneficiary to receive his retirement benefits; (6)"PEPP provision" means the manufacturing and distribution of a PEPP; (7) "PEPP beneficiary" means a person receiving PEPP retirement benefits; (8) "PEPP distribution" means the activities of advising on, proposing, or carrying out other work preparatory to the conclusion of contracts for providing a PEPP, of concluding such contracts, or of assisting in the administration and performance of such contracts, including the provision of information concerning one or more pension contracts in accordance with criteria selected by PEPP customers through a website or other media and the compilation of a pension product ranking list, including price and product comparison, or a discount on the price of a pension contract, when the PEPP customer is able to directly or indirectly conclude a pension contract using a website or other media; (9) "PEPP retirement benefits" means benefits paid by reference to reaching, or the expectation of reaching, retirement. These benefits may take the form of payments for life, payments made for a temporary period, a lump sum, or any combination thereof; (10) "accumulation phase" means the period during which assets (in-payments) are accumulated in a PEPP account and normally runs until the age of retirement of the PEPP beneficiary; (11) "decumulation phase" means the period during which assets accumulated in a PEPP account are drawn upon to fund retirement or other income requirements; (12) "annuity" means a sum payable at specific intervals over a period, such as the PEPP beneficiary's life or a certain number of years, in return for an investment; (13) "drawdown payments" means the possibility for the PEPP beneficiaries to draw discretionary amounts, up to a certain limit on a periodic basis;

(14) "provider of a PEPP" or "PEPP provider" means a financial undertaking authorised to manufacture a PEPP and distributing it; (15) "distributor of a PEPP" or "PEPP distributor" means a financial undertaking authorised to distribute PEPPs not manufactured by it, as well as an insurance, reinsurance or ancillary insurance intermediary; (16) "durable medium" means any instrument which: (a) enables a PEPP customer to store information addressed personally to that customer in a way accessible for future reference and for a period of time adequate for the purposes of the information; and (b) allows the unchanged reproduction of the information stored; (17) "competent authorities" of the PEPP providers means the national authorities designated by each Member State to supervise PEPP providers; (18) "home Member State of the PEPP provider" means the Member State in which the PEPP provider has its registered office; (19) "host Member State of the PEPP provider" means a Member State, other than the home Member State, in which a PEPP provider manufactures or distributes PEPPs; (20) "compartment" means a section which is opened within each individual PEPP account and which corresponds to the legal requirements and conditions for using incentives fixed at national level for investing in a PEPP by the Member State of the PEPP saver's domicile. Accordingly, an individual may be a PEPP saver or a PEPP beneficiary in each compartment, depending on the respective legal requirements for the accumulation and decumulation phases; (21) "capital" means aggregate capital contributions and uncalled committed capital, calculated on the basis of amounts investible after deduction of all fees, charges and expenses that are directly or indirectly borne by investors; (22) "financial instrument" means those instruments specified in Section C of Annex I of Directive 2014/65/EU; (23) "depositary" means an institution charged with the safe-keeping of assets and oversight of compliance with the fund rules and applicable law; (24) "default investment option" means an investment strategy applied when the PEPP saver has not provided instructions on how to invest the funds accumulating in his PEPP account; (25) "risk mitigation techniques" means techniques for a systematic reduction in the extent of exposure to a risk and/or the likelihood of its occurrence; (26) "switching providers" means, upon a PEPP customer’s request, transferring from one PEPP provider to another any positive balance from one PEPP account to the other, with or without closing the former PEPP account; (27) "advice" means the provision of a personal recommendation to a PEPP saver, either upon his request or at the initiative of the PEPP provider or distributor, in respect of one or more contracts for subscribing PEPP; (28) "PEPP customer" means a PEPP saver, a prospective PEPP saver and/or a PEPP beneficiary. Article 3

Applicable rules The provision of PEPPs shall be subject to: (a) this Regulation,

(b) where authorised by this Regulation, the provisions of the contract for the provision of a PEPP concluded between a PEPP saver and a PEPP provider, (c) in the case of matters not regulated by this Regulation or, where matters are partly regulated by it, of those aspects not covered by it, by: (i)the provisions of laws adopted by Member States in implementation of EU measures relating specifically to the PEPP; (ii)the provisions of Member States' laws which would apply to a comparable personal pension product manufactured and distributed in accordance with the law of the Member State in which the manufacturer has its registered office. CHAPTER II

AUTHORISATION Article 4

Authorisation 1.A PEPP may only be manufactured and distributed in the Union where it has been authorised by EIOPA in accordance with this Regulation. 2.Authorisation of a PEPP shall be valid in all Member States. It entitles the authorisation holder to manufacture and distribute the PEPP as authorised by EIOPA. Article 5

Application for authorisation of a PEPP 1.Only the following financial undertakings may apply for authorisation of a PEPP: (a) credit institutions authorised in accordance with Directive 2013/36/EU of the European Parliament and of the Council; (b)insurance undertakings authorised in accordance with Directive 2009/138/EC of the European Parliament and of the Council, engaged in direct life insurance according to Article 2(3) and Annex II of Directive 2009/138/EC; (c)institutions for occupational retirement provision registered or authorised in accordance with Directive 2016/2341/EU of the European Parliament and of the Council; (d)investment firms authorised in accordance with Directive 2014/65/EU, engaged in portfolio management or investment advice; (e)investment companies or management companies authorised in accordance with Directive 2009/65/EC of the European Parliament and of the Council; (f)alternative investment fund ("AIF") managers authorised in accordance with Directive 2011/61/EU of the European Parliament and of the Council. 2.Financial undertakings listed in paragraph 1 shall submit their applications for authorisation of a PEPP to EIOPA. The application shall include the following: (a) information on standard contract terms to be proposed to PEPP savers; (b) information on the identity of the applicant and its current and previous financial experience and history;

(c) the identity of the persons who effectively conduct the business of manufacturing and/or distributing the PEPP; (d)information on arrangements regarding portfolio and risk management and administration with regard to the PEPP; (e)information about the investment strategies, the risk profile and other characteristics of the PEPP; (f) a list of Member States where the applicant PEPP intends to market the PEPP; (g) information on the identity of the depositary, if applicable; (h) a description of the information to be made available to PEPP savers, including a description of the arrangements for dealing with complaints submitted by PEPP savers; (i) proof of the authorisation or registration of the applicant in accordance with the applicable Union legislative act referred to in paragraph 1 and information on the identity of the competent authority which granted it. 3.EIOPA may request clarification and additional information as regards the documentation and information provided under paragraph 1. 4.EIOPA may ask the competent authority of the financial undertaking applying for the authorisation for clarification and information as regards the documentation referred to in paragraph 2. The competent authority shall reply to the request within 10 working days from the date on which it has received the request submitted by EIOPA. 5.Any subsequent modifications to the documentation and information referred to in paragraphs 1 and 2 shall be immediately notified to EIOPA. Article 6

Conditions for granting authorisation of PEPPs 1.Within two months from the date of submission of a complete application, EIOPA shall grant authorisation of the PEPP only where EIOPA is fully satisfied that the following conditions are met: (a)the applicant complies with this Regulation; (b)the applicant is authorised by its competent authority to manufacture products that follow investment strategies of the type covered by this Regulation; (c)the proposed PEPP meets all the requirements of this Regulation; (d)the proposed PEPP is based on an investment strategy that allows for the retirement outcome contained in the proposed contractual rules. 2.Before taking a decision on the application, EIOPA shall consult the competent authority of the applicant. 3.EIOPA shall communicate to the applicant the reasons for any refusal to grant authorisation of a PEPP. 4.EIOPA shall withdraw the authorisation of a PEPP in the event that the conditions for granting this authorisation are no longer fulfilled. 5.EIOPA shall, on a quarterly basis, inform the competent authorities of the financial undertakings listed in Article 5(1) of decisions to grant, refuse or withdraw authorisations pursuant to this Regulation.

6.EIOPA shall ensure co-ordination with and transmit information for the purposes of the exercise of their respective tasks to the European Supervisory Authority (European Banking Authority) established by Regulation (EU) No 1093/2010 and the European Supervisory Authority (European Securities and Markets Authority) established by Regulation (EU) No 1095/2010. Article 7

Designation and conversion 1.The designation "PEPP" or "pan-European Personal Pension Product" in relation to a personal pension product may only be used where the personal pension product has been authorised by EIOPA to be distributed under the designation "PEPP" in accordance with this Regulation. 2.Existing personal pension products may be converted into "PEPPs" following authorisation by EIOPA. 3.PEPP providers shall not convert "PEPPs" into personal pension products that are not covered by this Regulation. Article 8

Distribution of PEPP 1.Financial undertakings referred to in Article 5(1) may distribute PEPPs which they have not manufactured upon receiving authorisation for distribution by the competent authorities of their home Member State. 2.Insurance intermediaries registered in accordance with Directive 2016/97/EU of the European Parliament and of the Council are entitled to distribute PEPPs which they have not manufactured. Article 9

Prudential regime applicable to different types of providers PEPP providers and PEPP distributors shall comply at all times with the provisions of this Regulation, as well as with the relevant prudential regime applicable to them in accordance with the legislative acts referred to in Article 5(1). Article 10

Central public register EIOPA shall keep a central public register identifying each PEPP authorised under this Regulation, the provider of this PEPP and the competent authority of the PEPP provider. The register shall be made publicly available in electronic format. CHAPTER III

CROSS-BORDER PROVISION AND PORTABILITY OF PEPP SECTION I

FREEDOM TO PROVIDE SERVICES AND FREEDOM OF ESTABLISHMENT Article 11

Exercise of the freedom to provide services and freedom of establishment by PEPP providers and distributors PEPP providers may provide and PEPP distributors may distribute PEPPs within the territory of a host Member State under the freedom to provide services or the freedom of establishment, provided they do so in compliance with the relevant rules and procedures established by or under the Union legislative acts applicable to them as referred to in Article 5(1) or 8(2). SECTION II

PORTABILITY Article 12

The portability service

1.The portability service allows PEPP savers to continue contributing to the PEPP which they have already contracted with its provider, while changing their domicile by moving to another Member State. 2.In case of using the portability service, PEPP savers are entitled to retain all advantages and incentives granted by the PEPP provider and connected with continuous investment in the same PEPP. Article 13

Provision of the portability service 1.PEPP providers shall provide the portability service to PEPP savers holding a PEPP account with them and requesting this service. 2.When proposing a PEPP, the PEPP provider or PEPP distributor shall provide potential PEPP savers with information on which national compartments are immediately available. 3.Three years at the latest after the entry into application of this Regulation, each PEPP shall offer national compartments for all Member States upon request addressed to the PEPP provider. Article 14

Compartments of the PEPP Without prejudice to the deadline under Article 13(3), PEPP providers shall ensure that within each individual PEPP account a new compartment could be opened, corresponding to the legal requirements and conditions for using incentives fixed at national level for the PEPP by the Member State to which the PEPP saver moves. Article 15

Opening of a new compartment 1.Without prejudice to the deadline under Article 13(3), immediately after being informed about the PEPP saver's intention to exercise his right of mobility between Member States, the PEPP provider shall inform the PEPP saver about the possibility to open a new compartment within the PEPP saver's individual account and about the deadline within which such compartment could be opened. 2.To make use of this possibility, the PEPP saver shall send to the PEPP provider a request, which shall include the following information: (a) the PEPP saver's new Member State of domicile; (b) the date from which the investments should be directed to the newly-opened compartment; (c) any relevant information about possible modifications in the adopted investment strategy or other elements. 3.Not later than three months following the reception of the request under paragraph 2, the PEPP provider shall provide the PEPP saver with complete information free of charge and advice under Chapter IV, Sections II and III regarding the conditions applicable to the new compartment. 4.The new compartment shall be opened by signing a new contract, or amending the existing one, between the PEPP saver and the PEPP provider, in compliance with the applicable contract law. The date of opening shall be defined in the contract or, in the absence of such stipulation, the new compartment shall be deemed opened at the date of signing the contract or the amendment thereto. Article 16

Transfer of accumulated rights between the compartments of the PEPP 1.At the request of the PEPP saver, the PEPP provider shall propose to the PEPP saver to arrange for transfer of accumulated assets between different compartments of the individual PEPP account, so that all assets could be consolidated in one compartment. 2.The transfer of assets under paragraph 1 shall be made possible without redemption in kind of these assets. Article 17

Provision of information on portability to the national authorities

1.All contractual arrangements for providing the portability service shall be notified by the PEPP provider to the respective national authority exercising prudential supervision over it. 2.The information under paragraph 1 shall be filed electronically in a central database held with the national supervisory authority within one month of opening the new compartment and shall contain at least: (a) identification of the compartment (name of the PEPP saver; applicable national legislation; date of opening the compartment); (b) amount of the transferred assets, if any; (c) way of transfer (with or without redemption in kind of the transferred assets). CHAPTER IV

DISTRIBUTION AND INFORMATION REQUIREMENTS SECTION I

General provisions Article 18

General principle When carrying out distribution activities for PEPPs, PEPP providers and PEPP distributors shall always act honestly, fairly and professionally in accordance with the best interests of their customers. Article 19

Distribution regime applicable to different types of PEPP providers and distributors For the distribution of PEPPs, the different types of PEPP providers and distributors shall comply with the following rules: (a)insurance distributors as defined in point (8) of Article 2(1) of Directive (EU) 2016/97 shall comply with the applicable national laws giving effect to the rules set out in Chapters V and VI of that Directive for the distribution of insurance-based investment products, with any directly applicable Union legislation adopted under those rules with respect to the distribution of such products and with the provisions of Articles 18, 19, 21 to 23, and 27 to 32 of this Chapter; (b)investment firms as defined in point (1) of Article 4(1) of Directive 2014/65/EU shall comply with the applicable national legislation laws giving effect to the rules on marketing and distribution of financial instruments set out in the first subparagraph of Article 16(3) of that Directive, in Articles 23, 24 and 25 of that Directive, with any directly applicable Union legislation adopted under those provisions, and with the provisions of Articles 18, 19, 21 to 23, and 27 to 32 of this Chapter; (c)all other PEPP providers and distributors shall comply with the all the provisions of this Chapter. Article 20

Inducements With regard to the payment or reception of fees or commissions or the provision or reception of non-monetary benefits in connection with the distribution of a PEPP to or by any party except the PEPP saver or a person acting on behalf of the PEPP saver, PEPP providers or distributors referred to in Article 19(c) of this Regulation shall comply with the applicable national laws giving effect to the rules set out for investment firms in Article 24(7)(b) and (9) of Directive 2014/65/EU. For the purposes of this Article, the reference in Article 24(9) of Directive 2014/65/EC to Article 23 of that Directive shall be read as a reference to Article 18 of this Regulation. Article 21

Electronic distribution and other durable mediums All documents and information under this Chapter shall be provided to PEPP customers electronically, provided that the PEPP customer is enabled to store such information in a way accessible for future reference and for a period of time adequate for the purposes of the information and that the tool allows the unchanged reproduction of the information stored. Upon request, PEPP providers and distributors shall provide free of charge those documents and information also on another durable medium.

Article 22

Product oversight and governance requirements 1.PEPP providers shall maintain, operate and review a process for the approval of each PEPP, or significant adaptations of an existing PEPP, before it is distributed to PEPP customers. The product approval process shall be proportionate and appropriate to the nature of the PEPP. The product approval process shall specify an identified target market for each PEPP, ensure that all relevant risks to such identified target market are assessed and that the intended distribution strategy is consistent with the identified target market, and take reasonable steps to ensure that the PEPP is distributed to the identified target market. The PEPP provider shall understand and regularly review the PEPPs it provides, taking into account any event that could materially affect the potential risk to the identified target market, to assess at least whether the PEPPs remain consistent with the needs of the identified target market and whether the intended distribution strategy remains appropriate. PEPP providers shall make available to PEPP distributors all appropriate information on the PEPP and the product approval process, including the identified target market of the PEPP. PEPP distributors shall have in place adequate arrangements to obtain the information referred to in the fifth subparagraph and to understand the characteristics and identified target market of each PEPP. 2.The policies, processes and arrangements referred to in this Article shall be without prejudice to all other requirements under or applying by virtue of this Regulation including those relating to disclosure, suitability or appropriateness, identification and management of conflicts of interest, and inducements. SECTION II

PRE-CONTRACTUAL INFORMATION Article 23

PEPP key information document 1.Before a PEPP is proposed to PEPP savers, the PEPP provider shall draw up for that product a PEPP key information document in accordance with the requirements of this Chapter and shall publish the document on its website. 2.PEPP providers and PEPP distributors shall comply with Articles 5(2), and 6 to 18 of Regulation (EU) No 1286/2014. 3.In addition to the information set out in Article 8(3)(c) of Regulation (EU) No 1286/2014, the section titled “What is this product?” shall contain the following information: (i)a description of the retirement benefits and the extent to which they are guaranteed; (ii)any minimum or maximum period for belonging to the PEPP scheme; (iii)the retirement age; (iv)general information on the portability service, including information on the compartments; (v)general information on the switching service, and a reference to the specific information about the switching service available under Article 50; (vi) available information related to the performance of the investment policy in terms of environmental, social and governance factors; (vii)the law applicable to the PEPP contract where the parties do not have a free choice of law or, where the parties are free to choose the applicable law, the law that the PEPP provider proposes to choose.

4.In addition to the PEPP key information document, PEPP providers and PEPP distributors shall provide potential PEPP savers with references to any reports on the solvency and financial condition of the PEPP provider, allowing them easy access to this information. 5.Potential PEPP savers shall also be provided with information on the past performance of investments related to the PEPP scheme covering a minimum of five years, or, where the scheme has been operating for fewer than five years, covering all the years that the scheme has been operating, as well as with information on the structure of costs borne by PEPP savers and PEPP beneficiaries. 6.In order to ensure consistent application of this Article, the European Supervisory Authorities (European Banking Authority, European Securities and Markets Authority and EIOPA) ("ESAs") shall, through the Joint Committee of the ESAs, develop draft implementing technical standards specifying the details of the presentation and the content of each of the elements of information referred to in paragraphs 3 and 4, together with the requirements needed to present that information in a standardised format allowing for comparison. When developing the draft implementing technical standards the ESAs shall take into account the various types of PEPPs, the differences between them and the capabilities of PEPP savers as well as the features of the PEPPs so as to allow the PEPP saver to select between different underlying investments or other options provided for by the product, including where this selection can be undertaken at different points in time, or changed in the future. The ESAs shall submit those draft implementing technical standards to the Commission by … . Power is conferred the Commission to adopt implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1093/2010, of Regulati