The European Fund and Asset Management Association has concluded that simplification of the pan-European personal pension product (Pepp) regulation is essential to increasing both provider participation and demand. In a paper on Tuesday 8 April 2025, Efama set out a series of targeted proposals aimed at improving the regulatory framework of the Pepp, ahead of anticipated revisions by the European Commission in the second half of 2025.

Efama stated that whilst its proposals required amending the existing regulation, they did not entail a complete overhaul. The association argued that the current regulatory design limited market entry and consumer uptake, and therefore reforms should prioritise greater flexibility for providers, reduced administrative burden and an improved value proposition for savers.

Voluntary national subaccounts

Efama recommended that Pepp providers be allowed to offer national subaccounts on a voluntary basis. It found that making national subaccounts optional rather than compulsory would reduce operational barriers and enable a broader range of providers to enter the market, particularly those without the capacity to operate across multiple member states.

The paper also advocated for the basic Pepp to be offered without the mandatory provision of financial advice. Efama stated this approach would streamline distribution by using digital tools to provide savers with sufficient information to assess the product independently, consistent with the product's intended simplicity and safety.

Life-cycle investment strategies

On investment strategies, Efama opposed regulatory mandates requiring stochastic modelling or minimum capital guarantee probabilities for life-cycle strategies. It concluded that such constraints encouraged investment in low-yield fixed-income assets, which neither matched the risk-return expectations of many retail investors nor supported capital formation in the wider economy.

Fee cap

The association supported the European Insurance and Occupational Pensions Authority’s (Eiopa) stance that the 1% fee cap imposed on the basic Pepp limited the economic viability of offering the product. Efama found that the regulatory focus should instead be on assessing whether the Pepp provided value for money based on the needs, goals and characteristics of individual savers.

Equal tax treatment

On fiscal treatment, Efama highlighted the need for member states to grant Pepps the most favourable tax treatment currently available to national pension products. It noted that this measure was critical for ensuring the competitiveness of the Pepp against existing domestic pension offerings.

Occupational pension

In a significant policy shift, Efama also proposed that the Pepp be made available as an occupational pension product. It argued this change would expand second-pillar pension coverage, especially among small and medium-sized enterprises (SMEs), and substantially increase demand by allowing the Pepp to complement existing occupational pension schemes.

Bernard Delbecque, senior director for economics and research at Efama, stated that increasing the number of providers and stimulating demand for the Pepp required regulatory simplification, targeted tax incentives, removal of the 1% fee cap and expanding the product’s function to include occupational pensions. He described the proposals as pragmatic measures that could unlock investment in high-growth assets and enable the Pepp to contribute meaningfully to the objectives of the European savings and investments union (SIU).

The full position paper is available .