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EUROPEAN UNION

Pensions in the EU: What you need to know if you’re moving country

Have you ever wondered what to do with your private pension plan when moving to another European country?

Pensions in the EU: What you need to know if you're moving country
Flags of the EU member states flutter in the air near a statue of the Euro logo outside the European Commission building in Brussels, on May 28, 2020. (Photo by Kenzo TRIBOUILLARD / AFP)

This question will probably have caused some headaches. Fortunately a new private pension product meant to make things easier should soon become available under a new EU regulation that came into effect this week. 

The new pan-European personal pension product (PEPP) will allow savers to take their private pension with them if they move within the European Union.

EU rules so far allowed the aggregation of state pensions and the possibility to carry across borders occupational pensions, which are paid by employers. But the market of private pensions remained fragmented.

The new product is expected to benefit especially young people, who tend to move more frequently across borders, and the self-employed, who might not be covered by other pension schemes. 

According to a survey conducted in 16 countries by Insurance Europe, the organisation representing insurers in Brussels, 38 percent of Europeans do not save for retirement, with a proportion as high as 60 percent in Finland, 57 percent in Spain, 56 percent in France and 55 percent in Italy. 

The groups least likely to have a pension plan are women (42% versus 34% of men), unemployed people (67%), self-employed and part-time workers in the private sector (38%), divorced and singles (44% and 43% respectively), and 18-35 year olds (40%).

“As a complement to public pensions, PEPP caters for the needs of today’s younger generation and allows people to better plan and make provisions for the future,” EU Commissioner for Financial Services Mairead McGuinness said on March 22nd, when new EU rules came into effect. 

The scheme will also allow savers to sign up to a personal pension plan offered by a provider based in another EU country.

Who can sign up?

Under the EU regulation, anyone can sign up to a pan-European personal pension, regardless of their nationality or employment status. 

The scheme is open to people who are employed part-time or full-time, self-employed, in any form of “modern employment”, unemployed or in education. 

The condition is that they are resident in a country of the European Union, Norway, Iceland or Liechtenstein (the European Economic Area). The PEPP will not be available outside these countries, for instance in Switzerland. 

How does it work?

PEPP providers can offer a maximum of six investment options, including a basic one that is low-risk and safeguards the amount invested. The basic PEPP is the default option. Its fees are capped at 1 percent of the accumulated capital per year.

People who move to another EU country can continue to contribute to the same PEPP. Whenever a consumer changes the country of residence, the provider will open a new sub-account for that country. If the provider cannot offer such option, savers have the right to switch provider free of charge.  

As pension products are taxed differently in each state, the applicable taxation will be that of the country of residence and possible tax incentives will only apply to the relevant sub-account. 

Savers who move residence outside the EU cannot continue saving on their PEPP, but they can resume contributions if they return. They would also need to ask advice about the consequences of the move on the way their savings are taxed. 

Pensions can then be paid out in a different location from where the product was purchased. 

Where to start?

Pan-European personal pension products can be offered by authorised banks, insurance companies, pension funds and wealth management firms. 

They are regulated products that can be sold to consumers only after being approved by supervisory authorities. 

As the legislation came into effect this week, only now eligible providers can submit the application for the authorisation of their products. National authorities have then three months to make a decision. So it will still take some time before PEPPs become available on the market. 

When this will happen, the products and their features will be listed in the public register of the European Insurance and Occupational Pensions Authority (EIOPA). 

For more information:

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp/consumer-oriented-faqs-pan_en 

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en 

This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK. 

Member comments

  1. The cap of 1% fees is welcome but frankly way too high. If you compare to the fees charged by Vanguard or Fidelity in the US you can see how even 1% over the savings lifetime of 30-40 years is a real gouge. This is plain vanilla arithmetic. I have a managed individual retirement account at Vanguard in the US that charges me .16%. And note that is a managed fund. The purer index funds, which simply track the whole market whether bonds or shares, are even less costly.

  2. I have been paid a complementary pension by Agirc-Arrco ( after much difficulty trying to claim it during the pandemic). I received it ( I thought ) under the terms of the Brexit Withdrawal Agreement ( financial section) which states that a person should not be worse off re their financial situation ( french complementary pension) after Brexit. Although I lived and worked in France for
    Ten years and accumulated many points in the scheme…for which I have been paid monthly…now they have blocked my
    account due to completely ambiguous wording of the INFO RETRAITE formulaire which I used for instructions in sending my certificat de Vie. I am 68 years old and worked hard years to accumulate this pension….who to speak to ? I am hoping that the French state part of my pension will be paid as usual as that account isn’t blocked. Any help appreciated.
    .

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TRAVEL NEWS

Driving in France: Motorway tolls rise from February 1st

The cost of using France’s motorway network rose by a below-inflation average of 4.75 percent on Wednesday, February 1st.

Driving in France: Motorway tolls rise from February 1st

Going through the toll booths on France’s motorway network now costs more – though the average 4.75 percent increase remains below inflation, and is lower than the price rise of between 7 percent and 8 percent predicted last September after Transport Minister Clément Beaune called for “reasonable increases”.

“We are well below the reference inflation rate of 6.33 percent,” Vinci Autoroutes, which manages nearly half of the French network, said in a statement.

Even so, motorists may not appreciate the motorway companies’ efforts to ease the effects of the cost of living crisis, as prices rise unevenly across the board.

A journey from Toulon, in the Var, to Mandelieu, in Alpes-Maritimes (113km) now costs €13 in tolls, up from €12.10 in 2022 – an increase of 7.4 percent.

Drivers heading between Lyon and Montpellier now have to pay an extra €1.90 to make their journey, up 6.7 percent on last year’s prices; and motorists will have to pay an additional €2.10 to make the five-hour journey along the A4 between Paris and Strasbourg.

In recent years, the annual rate of the annual increases has been lower. Tolls went up 2 percent on average last year, and just 0.44 percent in 2021. The annual increases are based on a formula that takes into account the rate of inflation and the amount of maintenance work undertaken, which is written into the motorway operators’ contracts with the government.

For home-work trips, Vinci Autoroutes has frozen the prices of 70 percent of trips of less than 30 km, as well as “half of trips of less than 50km and the bypass routes of 35 towns”.

The stretches between Aubagne and Cassis (Bouches-du-Rhône) on the A50, between Villefranche-de-Lauragais and Toulouse sud (Haute-Garonne) on the A61, and between Orléans nord and Olivet (Loiret) on the A10, for example, will see no price increase.

Subscribers to the Ulys 30 electronic toll system, meanwhile, now receive 40 percent concessions, compared to 30 percent previously on their regular commuter route.

According to Vinci, for every €10 in tolls, €4 is then paid to the government in taxes; €3.50 covers maintenance, modernisation and operating costs; and the remainder repays investors and services debts.

However, motorway operators are regularly singled out for the scale of their profits, recorded at €3.9 billion in 2021, 11 percent more than in 2019. 

If you’re driving in French towns and cities, remember that you may need a Crit’Air sticker – full details HERE.

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