PEPP can be the catalyst for savings in Portugal – Insurance
For Valdemar Duarte, director-general of Ageas Pensões, the PEPP (Pan European Retirement Product) can be seen from two perspectives, which are converging. The European Commission decided to take an initiative to promote private savings for a reform with the launch of the PEPP and, on the other hand, decided in an accelerated way to be a pioneer in sustainability.
“We see Europe at this moment giving cards around the sustainability process, both on the side of creating products for the consumer and issuing bonds that institutional investors can create products to be sustainable”, executives Valdemar Duarte. He noted that ESG sustainable bond bonds are expected to reach €880 billion this year, 20% of the bond supply. He also referred that public debt is starting to be green.
The two reasons why the European Union took this initiative. The first was the realization that the level of savings that exists on average in European societies is manifestly low compared to the needs that are anticipated for the future, in terms of resources to pay pensions and that workers can have guaranteed pensions. “The systems that exist are very different versus some very well tuned for the purpose of providing savings for retirement and others not for that reason, and therefore, there was scope to create a common framework that would serve all countries”, considered Valdemar Duarte.
The second reason is the single market and mobility. “One of the major obstacles to worker mobility is related to supplementary pension schemes. Anyone who works in 10 countries and who receives pensions in these ten countries has a real puzzle and often runs the risk of losing benefits or of not receiving or being treated badly in fiscal terms, “revealed Valdemar Duarte.
The PPR and the PEPP
Before referring specifically to the PEPP, Valdemar Duarte made a historical digression on the PPR that was created in 1989 with a relevant tax benefit and as “an objectively reformed product”, but, over a period of three decades, the PPR lost the benefits and focus of reform.
“It became a medium-term savings product, and since 2014, it no longer has tax benefits for deducting income, upon collection. It has the tax benefit in capitalization. Which makes it an excellent product in terms of the medium and long term. , but lost the attractiveness of immobilization for reform, “explained Valdemar Duarte.
“In Portugal, the PEPP can be the catalyst for thinking about retirement and it can be the opportunity for the authorities to think about saving for retirement”, considered Valdemar Duarte.
It’s the opportunity for authorities to “cherish a product that has very strong governance rules, rules for consumers in terms of capital protection, cost limitation,” said Valdemar Duarte, despite the fact that, because of the 1% cost limit , “not knowing very well who promotes and has to create the product, but we have to settle for it”.
In his opinion this should be a way to reinstate the benefits for a reform. “We had strong hopes that the PEPP would have an interesting fiscal benefit, but beyond that, benefits of another kind, the impulse, the public discourse to recognize that it is important and indispensable to save for a reform. It is not to replace a pension. . of social security, but because we need the occupational savings of companies and individual savings, and all together they are not enough to be able to expect to have a good level of retirement”, concluded Valdemar Duarte.