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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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For members

IMMIGRATION

EXPLAINED: What are the main obstacles to finding a job when moving to an EU country?

Moving to another country is never easy, as it requires going through cultural changes and administrative formalities. It can be even more complicated when looking for a job.

EXPLAINED: What are the main obstacles to finding a job when moving to an EU country?

According to new data released by the EU statistical office, Eurostat, the knowledge of the national language and the recognition of professional qualifications are the two most common obstacles experienced by foreign-born people in finding a ‘suitable’ job in countries of the European Union.

Overall, about a quarter of people born outside the EU who had experience in working or looking for work in the bloc reported some difficulties getting a ‘suitable’ job for level of education (without considering the field of expertise or previous experience).

The Eurostat analysis shows that the situation is better for EU citizens moving within the bloc. But there are major differences depending on countries and gender.

Life can be more difficult for women

In 2021, 13.2 percent of men and 20.3 percent of women born in another European Union country reported obstacles in getting a suitable job in the EU place of residence.

These proportions however increase to 20.9 percent for men and 27.3 percent for women born in a non-EU country with a high level of development (based on the United Nations’ Human Development Index) and 31.1 percent for men and 35.7 percent for women from non-EU countries with a low or medium level of development.

Finland (42.9 percent), Sweden (41.7 percent), Luxembourg (34.6 percent) and France (32.1 percent) are the countries with the highest shares of people born outside the EU reporting problems. Norway, which is not part of the bloc, has an even higher percentage, 45.2, and Switzerland 34.3 percent.

In contrast, Cyprus (11.2 percent), Malta (10.9 percent), Slovenia (10.2 percent), Latvia (10 percent) and Lithuania (6.7 percent) have the lowest proportion of people born outside the EU reporting difficulties.

Lack of language skills

The lack of skills in the national language is most commonly cited as a hurdle, and it is even more problematic for women.

This issue was reported by 4.2 percent of men born in another EU country, 5.3 percent of those born in a developed country outside the EU and 9.7 percent of those from a non-EU country with a middle or low level of development. The corresponding shares for women, however, were 5.6, 6.7 and 10.5 percent respectively.

The countries where language skills were more likely to be reported by non-EU citizens as an obstacle in getting a relevant job were Finland (22.8 percent), Luxembourg (14.7 percent) and Sweden (13.1 percent).

As regards other countries covered by The Local, the percentage of non-EU citizens citing the language as a problem was 12.4 percent in Austria, 10.2 percent in Denmark, 7.8 percent in France, 5.1 percent in Italy, 2.7 percent in Spain, 11.1 percent on Norway and 10.1 percent in Switzerland. Data is not available for Germany.

Portugal (77.4 percent), Croatia (68.8 percent), Hungary (58.8 percent) and Spain (58.4 percent) have the highest share of people from outside the EU already speaking the language as a mother tongue before arriving, while more than 70 percent of non-EU citizens residing in Denmark, Finland, Luxembourg and Norway said they had participated in language courses after arrival.

Lisbon Portugal

Portugal has the highest share of people from outside the EU already speaking the language as a mother tongue before arriving. (Photo by Aayush Gupta on Unsplash)

Recognition of qualifications

Another hurdle on the way to a relevant job in EU countries is the lack of recognition of a formal qualification obtained abroad. This issue was reported by 2 percent of men and 3.8 percent of women born in another EU country. It was also mentioned by 3.3 percent of men and 5.9 percent of women born in a developed country outside the EU, and 4.8 percent of men and 4.6 percent of women born in a less developed non-EU country.

Eurostat says this reflects an “unofficial distrust” among employers of qualification obtained abroad and the “low official validation of foreign education”.

The lack of availability of a suitable job was another factor mentioned in the survey. In Croatia, Portugal and Hungary, this was the main obstacle to getting an adequate position.

This issue concerned 3.3 percent of men and 4.5 percent of women born in another EU country, 4.2 percent of men and 5 percent of women born in a developed non-EU country It also worried 3.9 percent of men and 5.1 percent of women born in a less developed non-EU country.

Restricted right to work due to citizenship or residence permits, as well as plain discrimination on the grounds of origin were also cited as problems.

Discrimination was mostly reported by people born in a less developed non-EU country (3.1 percent for men and 3.3 percent for women) compared to people born in highly developed non-EU countries (1.9 percent for men and 2.2 percent for women).

Citizenship and residence permits issues are unusual for people from within the EU. For people from outside the EU, this is the only area where women seem to have fewer problems than men: 1.6 percent of women from developed non-EU countries reported this issue, against 2.1 percent of men, with the share increasing to 2.8 and 3.3 percent respectively for women and men from less developed non-EU states.

The article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK.

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