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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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‘Double processing time’: Austria and Germany fear non-EU travellers face border delays

Germany, Austria and another of other countries in Europe's Schengen area admit they fear delays and insufficient time to test the process ahead of new, more rigorous EU border checks that will be introduced next year, a new document reveals.

'Double processing time': Austria and Germany fear non-EU travellers face border delays

Schengen countries are tightening up security at the external borders with the introduction of a new digital system (EES) to record the entry and exit of non-EU citizens in May 2023.

The EES will enable the automatic scanning of passports replacing manual stamping by border guards. It will register the person’s name, type of the travel document, biometric data (fingerprints and facial images) and the date and place of entry and exit. The data will be kept in a centralised database on a rolling three-year basis that is re-set at each entry. 

What the EES is intended to do is increase border security, including the enforcement of the 90-day short-stay limit for tourists and visitors. EU citizens and third-country nationals who reside in a country of the Schengen area will not be subject to such checks.

READ ALSO: Foreigners living in EU not covered by new EES border checks

But given its scale, the entry into operation of the system has been raising concerns on many fronts, including the readiness of the physical and digital infrastructure, and the time required for border checks, which could subsequently cause massive queues at borders.

A document on the state of preparations was distributed last week by the secretariat of the EU Council (the EU institution representing member states) and published by Statewatch, a non-profit organisation that monitors civil liberties.

The paper contains the responses from 21 member states to a questionnaire about potential impacts on passenger flows, the infrastructure put in place and the possibility of a gradual introduction of the new system over a number of months.

This is what certain the countries have responded. Responses from Denmark, Spain and Sweden do not appear in the report but the answers from other countries will be relevant for readers in those countries.

READ ALSO: What the EU’s new EES border check system means for travel

‘Double processing time’

Austria and Germany are the most vocal in warning that passport processing times will increase when the EES will become operational.

“The additional tasks resulting from the EES regulation will lead to a sharp increase in process times”, which are expected to “double compared to the current situation,” Austrian authorities say. “This will also affect the waiting times at border crossing points (in Austria, the six international airports),” the document continues.

“Furthermore, border control will become more complicated since in addition to the distinction between visa-exempt and visa-required persons, we will also have to differentiate between EES-required and EES-exempt TCN [third country nationals], as well as between registered and unregistered TCN in EES,” Austrian officials note.

Based on an analysis of passenger traffic carried out with the aviation industry, German authorities estimate that checking times will “increase significantly”.

France expects to be ready for the introduction of the EES “in terms of passenger routes, training and national systems,” but admits that “fluidity remains a concern” and “discussions are continuing… to make progress on this point”.

Italy is also “adapting the border operational processes… in order to contain the increased process time and ensure both safety and security”.

“Despite many arguments for the introduction of automated border control systems based on the need for efficiency, the document makes clear that the EES will substantially increase border crossing times,” Statewatch argues.

‘Stable service unlikely by May 2023’

The border infrastructure is also being adapted for collecting and recording the data, with several countries planning for automated checks. So what will change in practice?

Austria intends to install self-service kiosks at the airports of Vienna and Salzburg “in the course of 2023”. Later these will be linked to existing e-gates enabling a “fully automated border crossing”. Austrian authorities also explain that airport operators are seeking to provide more space for kiosks and queues, but works will not be completed before the system is operational.

Germany also plans to install self-service kiosks at the airports to “pre-capture” biometric data before border checks. But given the little time for testing the full process, German authorities say “a stable working EES system seems to be unlikely in May 2023.”

France will set up self-service kiosks in airports, where third-country nationals can pre-register their biometric data and personal information before being directed to the booth for verification with the border guard. The same approach will be adopted for visitors arriving by bus, while tablet devices such as iPads will be used for the registration of car passengers at land and sea borders.

Italy is increasing the “equipment of automated gates in all the main  airport” and plans to install, at least in the first EES phase, about 600 self-service kiosks at the airports of Rome Fiumicino, Milan Malpensa, Venice and in those with “significant volumes of extra-Schengen traffic,” such as Bergamo, Naples, Bologna and Turin.

Switzerland, which is not an EU member but is part of the Schengen area, is also installing self-service kiosks to facilitate the collection of data. Norway, instead, will have “automated camera solutions operated by the border guards”, but will consider self-service options only after the EES is in operation.

Gradual introduction?

One of the possibilities still in consideration is the gradual introduction of the new system. The European Commission has proposed a ‘progressive approach’ that would allow the creation of “incomplete” passenger files for 9 months following the EES entry into operation, and continuing passport stamping for 3 months.

According to the responses, Italy is the only country favourable to this option. For Austria and France this “could result in more confusion for border guards and travellers”. French officials also argue that a lack of biometric data will “present a risk for the security of the Schengen area”.

France suggested to mitigate with “flexibility” the EES impacts in the first months of its entry into service. In particular, France calls for the possibility to not create EES files for third-country nationals who entered the Schengen area before the system becomes operational, leaving this task to when they return later.

This would “significantly ease the pressure” on border guards “during the first three months after entry into service,” French authorities said.

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