European Fund and Asset Management Association calls for a more flexible PEPP and principles-based IORP II changes to support supplementary pensions

The European Fund and Asset Management Association (EFAMA) published a position paper on the European Commission’s Supplementary Pensions Package, welcoming the initiative while arguing that meaningful gains in supplementary pensions will depend on strong national implementation. EFAMA says PEPP and IORP reforms should be combined with Member State measures such as auto-enrolment in occupational pensions, supportive tax incentives and pension tracking systems to raise participation. On PEPP, EFAMA supports removing the 1% fee cap for the Basic PEPP to improve product viability and encourage provider participation, but questions the proposed Value for Money framework on the grounds that it cannot meaningfully capture long-term pension performance. It also backs removing the mandatory advice requirement, while calling for consumer choice between independent and non-independent advisers where advice is sought, and supports life-cycle investment strategies as the default option for the Basic PEPP with flexibility for providers in their design. EFAMA further argues that the current 5% limit for investment in private assets is too restrictive and should allow risk profiles with higher exposure to unlisted or illiquid assets. For IORP II, it calls for retaining the Prudent Person Principle, adopting a principles-based approach to cost transparency in collective schemes, and applying depositary requirements proportionately while recognising existing national custody, audit and supervisory frameworks.