Necessary protection for European savers or an unwanted provision that will damage future pension income? Delbeque accepts that reaching a decision on the default option will not be easy in the face of potential political opposition, not least from the centre-left, in the European Parliament.
Simone Miotto, senior policy adviser, says this is so PEPPs can accommodate different business models to encourage provider uptake. It says there should be a default option allowing providers to include a what is the option guarantee guarantee or other risk-mitigation strategies, such as a life-cycle strategy. Miotto notes that European pension savings are concentrated in countries like the UK and the Netherlands.
Boosting pension savings overall by channelling assets from other sources, such as bank savings and putting them to work in longer-term investments, would be beneficial overall. Other organisations are generally supportive of PEPP. Funded systems, as in the UK, are in deficit, while pay-as-you-go schemes, as in France, are being undermined by the severe decrease in the ratio of workers to retirees.
Yet he cautions against a debate that focuses only on the merits of guarantees versus life-cycle options when neither provides for income in retirement. Replacement income, not absolute wealth, should be the focus, he stresses. According to a paper, the European Council was concentrating on generalities, but with a positive tone.