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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: 

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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Is Germany becoming a ‘low wage’ country?

More and more people are having to take on multiple jobs to get by in Germany, as many salaries are too low to keep up with living costs.

Is Germany becoming a 'low wage' country?

More than 3.5 million people in Germany have more than one job – a figure which has more than doubled in the past 20 years. The problem is being exacerbated by high inflation which, in 2022, reached an average of 7.9 percent – the highest level since German reunification.

According to Philipp Schumann, the Secretary-General of the service trade union Verdi Germany is becoming a “low-wage country”.

He told Taggeschau: “With a minimum wage of €12, working full-time for 42 hours a week earns you slightly less than €2,200. That’s only about 60 percent of the average income in Germany and is not enough to make a living.”

READ ALSO: ‘Real’ wages fell at record speed in Germany last year

He also said that it may be that the German job market could soon end up resembling that of the US, with more and more people taking on multiple jobs to get by financially.

He said that only when those affected earn about 80 percent of the average income would they no longer need two or more jobs. But, for that to happen, the minimum wage would need to rise to around €17 to €18 per hour.

Enough work, but not enough money

When the minimum wage was increased to €12 per hour on October 1st, 2022, many hoped for an improvement in their standard of living. But rising inflation dashed those hopes.

According to the most recent “poverty report” by the German Parity Welfare Association from 2022, 16.9 percent of the population in Germany was affected by poverty, and the trend is rising, as sharply increasing prices in recent months are making more and more workers poor.

READ ALSO: Germany slips into recession with negative first quarter

The phenomenon of multiple employment is also affecting people from all educational backgrounds and is no longer limited to low-wage sector workers.

The report by Tagesschau includes the example of Olaf Karg, who studied social law and worked as a mortgage broker until the end of last year. However, due to an increase in interest rates, his business collapsed, and since then, he has been working multiple jobs.

He works as a sound assistant at conferences, a DJ, and an emergency medical technician. “In the worst months, I was missing high four-digit sums of euros. With just one job, I would be €1,000 short and would reach my financial limits,” the 53-year-old said about his situation.