This article was originally published in French in Revue Banque, © La Revue Banque.
Read the English translation below:
When the idea of a Pan-European Personal Pension Product (PEPP) first emerged, it promised more than a new saving vehicle. It offered a vision of continuity in a continent defined by mobility across borders — a pension that could accompany citizens wherever they lived and worked. The concept was bold, its purpose clear: to create a pension solution that strengthens retirement savings, supports cross-border mobility, and fosters a unified European market for personal pensions.
Several years on, PEPP 1.0 has yet to gain any meaningful traction. With only two PEPP providers, it remains a good idea trapped in an unworkable design. The failure was not born of low ambition but of excessive rigidity. By prioritising rules over incentives, the framework discouraged both providers from creating new products and savers from choosing those instead of existing national pension products.
How the PEPP’s design undermined its promise
The first framework suffered from structural constraints that made the product unattractive for both providers and consumers. The 1% fee cap on the Basic PEPP, while well-intentioned in its aim to keep costs low and returns high, failed to reflect commercial realities. Personal pension products face higher distribution and servicing costs than occupational schemes, which benefit from the employer-based scale and simplified access. Fixing a rigid cost cap effectively eliminated the incentive for providers to enter the market.
The approach to advice added a further layer of friction. While access to advice is essential, mandating it for the Basic PEPP proved counterproductive. It increased distribution costs, lengthened the investor journey, and ultimately reduced accessibility. The result was a product that struggled on both fronts: neither commercially viable for providers nor sufficiently consumer friendly.
The European Commission issued a new proposal in November 2025. It recognises these fundamental issues. Removing the rigid fee cap, simplifying distribution, and allowing “safe by design” products to be offered without mandatory advice are essential corrections.
The opportunity: creating the conditions, not the constraints
But regulation alone does not create demand. A product designed to work across borders must also appeal to real-life savers. The challenge is to build a genuine market, rather than overengineering a framework and then working backwards. This means balancing investor protection with commercial viability.
In that light, the proposed “value for money” benchmarks risk putting the cart before the horse. With only two PEPP providers, there are simply not enough peers to make such comparisons meaningful. Value in a pension context is realised over decades, through the interplay of returns, risk and costs - reducing “value” to a price tag contradicts the very purpose of long-term saving. The sensible approach is to let the market mature first and build performance evidence progressively before codifying metrics that may not be appropriate.
Equally important is accessibility. Removing mandatory advice for “safe by design” products is an essential step. Reimposing new advice requirements would only reintroduce obstacles and raise costs for retail investors. Proportionality should remain the rule: investors need guidance that is available and affordable, not regulation that prices them out.
Member States also have a role to play. Without favourable tax treatment comparable to national pension products, the PEPP will struggle to gain meaningful traction. This is not a secondary consideration — tax advantages form the backbone of voluntary retirement saving throughout Europe. The experience of Nordic countries shows how stable, transparent incentives build trust and encourage retail participation over time.
Complementing what works, not competing
Success will ultimately depend on how the PEPP integrates with existing national systems, not how it competes with them. This is particularly true in countries such as France, where products like the Plan d’Épargne Retraite (PER) are already well-established and highly successful. The goal should not be to replace effective domestic frameworks, but to complement them. Ensuring that savers can transfer assets between PEPP and national products - in both directions - will be critical. The PER itself offers valuable lessons—not least its use of lifecycle investing and the flexibility for savers to choose risk profiles, including exposure to private assets.
Similar lessons can be drawn from the UK’s experience with auto‑enrolment, which has significantly expanded pension coverage. PEPP could, over time, play a role in similar frameworks—through employer contributions or collective schemes, provided that national frameworks remain in control and social partners remain involved.
Operational flexibility will also matter. Simplifying requirements and allowing providers to scale gradually across borders can lower barriers to entry. Portability for savers should remain the defining feature, but it should be built up progressively as the market matures.
The priority is therefore clear: create the conditions for a market to emerge, and refine the framework as it develops.
Europe’s second chance
Europe now is faced with its impending pension time bomb and stands at a crossroads. The first attempt at the PEPP exposed how ambition can falter when constrained by rigidity. The next iteration must be pragmatic — enabling markets to form rather than prescribing them into existence.
Demographic trends make this urgency clear: public systems are under strain, careers are increasingly mobile, and the need for efficient long‑term savings is universal. A functioning pan‑European pension should not be an abstract project; it is a vital complement to Europe’s economic resilience and social cohesion.
The Commission’s proposal is a step toward that goal. But success will depend on one simple conviction — that regulation should create the conditions for a market to grow, not the obstacles for it to fail. A well-designed PEPP can deliver choice to savers, opportunity to providers, and reinforce Europe’s capital markets.
The vision remains the same. Let’s hope we’ve learned our lesson.
Author: Kimon Argyropoulos, Senior Regulatory Policy Advisor, EFAMA
