EU pension' planned for people who move between countries

A new “EU pension” will be introduced to aid people who move around the continent, under proposals from the European commission.

The EU-branded product will allow workers hopping from country to country to continue seamlessly to save into one pot.

To make the EU pensions more attractive to savers, Brussels will recommend to national governments that they give the pan-European pension product the most favourable tax treatment they are able to provide.

It had been hoped that tax treatments of pensions could be harmonised as part of the proposal but that has not survived consultation with the member states.

Providers of the new EU pension will also need to live up to high levels of transparency over fees, amid growing concern that savers are currently being left in the dark about the charges being taken from their savings.

The European commission says it is hoped the EU pension will encourage workers, particularly those who exploit the EU’s freedom of movement, to save during their lifetimes. Currently, only 27% of Europeans between 25 and 59 years old have enrolled themselves in a pension product.

Because member states tax pensions differently, providers will have to keep savers’ contributions divided up, depending on where their clients were living and working when they made their payments. However, the administration would be left to private pension providers who run the Pan-European Personal Pension Product (PEPP).

The commission suggests that any pension given the EU branding should offer savers different investment options for their cash, on a scale that would suit those with more conservative tastes to those willing to take greater risks with their cash in the hope of better yields. Savers will have the right to switch providers – both domestically and cross-border – at a capped cost every five years.