Need for action at individual, national and EU level

People are living longer, working longer and pension levels are falling. A private old-age pension in addition to a statutory pension seems to be an absolutely must for sufficient financial provision in old age.

But how many people in Europe are already doing this? What do they need to take this step?

Insurance Europe survey

Insurance Europe recently conducted a survey on the issue.

Insurance Europe is the European insurance and reinsurance federation. Through its 37 members of national insurance associations, Insurance Europe represents all types of insurance and reinsurance funds.

The key findings from the survey of more than 10,000 people across 10 EU countries are as follows:

• 43% of those surveyed are not saving privately for retirement. Most of them recognise the need to do this, but many cannot afford to do so.
  
• For those who are saving privately for retirement, security is the most important priority for their investment, followed by flexibility in making contributions and the possibility of leaving savings to descendants.
  
• Where there were no monetary projections, almost half of the respondents wanted an annuity, while 30% preferred flexible payments; only 19% opted for a lump sum pay-out. However, where there were projections, respondents were evenly split between annuities and lump sums.
  
• Investors want to receive information about investment products digitally rather than in paper form. The information of greatest interest concerns guarantees, costs, risks and pay-out options.
  

European Commission sees need to take action

According to the European Commission, people need to get more information about the financial market. They need simple, clear information about the products on offer. Otherwise, there is a danger that people will not take the necessary precautions because the information available is overwhelming and confusing, which makes people worry about making wrong decisions. The end result could be old-age poverty. 

The Commission also wants to address the issue of occupational pensions. These are not available in every sector, and when people change jobs they often cannot take their pension rights with them. This could be a starting point for strengthening this pillar.

There is currently no harmonised EU law on the transferability of occupational pension rights. At EU level, however, the aim of Directive 2014/50/EU is to at least improve transferability by setting minimum standards for the preservation of pension rights of workers in different Member States.

At the request of the Commission, the European Insurance and Occupational Pensions Authority (EIOPA) produced a report on good practices on the transferability of supplementary occupational pension rights. The report analyses problem areas and provides advice and information to stakeholders.

It remains to be seen what further approaches the EU Commission will pursue with regard to occupational pensions.

In addition, the EU Commission is continuing to work on a Pan-European Private Pension Product PEPP (see article 09/2018). However, it is expected that the first PEPP offers will not be on the market before 2022.