A pan-European pension regime would not need to be sold through advisers because it would be low-cost, highly standardised and have in-built consumer protections, Eiopa has said.
The European Union pensions regulator made the comments in its latest consultation on proposals, which could see the introduction of a continent-wide pension regime.
Under the proposals products offered under the regime would have standardised limited investment choices, regulated caps on cost and charges and regulated switching and transfer of funds.
But there would be no specified way in which the savings built up through one of these schemes would be decumulated.
In the 110-page consultation document, Eiopa said: “Eiopa recognises that advice is very important for many individuals in aiding them to make the best decisions when purchasing financial products or services.
“However, Eiopa believes that the objective in the case of Pan-European Personal Pension (Pepp) should be to develop default investment options in a way that would see them capable of being automatically designated as non-complex investments.
“This approach would support the introduction of a simple, low-cost product (where distribution costs are a significant factor in terms of overall costs) which still offers a high level of consumer protection by virtue of the high levels of regulation of the product itself.
“Eiopa believes it will be crucial for the Pepp that nonadvised online sales of the default option are possible in a cost effective manner.”
In addition Eiopa has said it is “essential” that providers of these products do not create incentives for sales staff and intermediaries to sell one offering over another in conflict with its proposed requirement to act in the saver’s best interest.
The EU regulator is proposing that potential savers should be informed in advance in a clear way about the types of remuneration and incentives that the seller will receive for the sale.
Eiopa first consulted on the proposals last year as part of the European Commission’s bid to create a Capital Markets Union by 2019.
Its proposals have been disapproved of in the UK, with the Pensions and Lifetime Savings Association warning it would muddy the waters of pension regulation.
But the regulator said the lack of, or limited, provider access to the whole of the EU market is evidence of a fragmented and imperfect market that ultimately prevents pension providers from achieving both economies of scale and growth potential.
The EU regulator added: “On the consumer side, an inefficient single market means that EU citizens, who are also increasingly mobile, cannot reap the benefits of wider provider choice, better quality and lower prices due to the lack of EU-wide competition between market players.”
Eiopa’s consultation runs until 26 April.
