Question ID: 2625
Regulation Reference: (EU) 2019/1238 - Pan-European Personal Pension Product (PEPP)
Topic: General provisions (Art. 1 – 4 and 71 - 74 PEPP)
Article: 2 and 20
Status: Final
Date of submission: 27 Apr 2023
Question
The PEPP regulation does not regulate the case if the PEPP saver moves outside the European Union. Can the client continue to contribute to such an PEPP account and can the PEPP provider provide the PEPP to that client outside the EU? And if he had more sub-accounts, to which sub-account can he continue to contribute to the last one?
There is also no provision regarding the early termination of the PEPP contract or the possible procedure in such a case. If the client moves outside the European Union, is it possible to rely on national legislation if it exists in this area? For example, termination of the contract in the form of early withdrawal?
For example, the PEPP provider is dealing with clients leaving for work in the UK. Would this counts as a break in savings to the PEPP or termination of the contract with legal consequences such as penalties for early termination?
EIOPA answer
The PEPP Regulation applies only to EEA Member States and residents of EEA Member States. As such, the PEPP Regulation does not explicitly refer to a case of PEPP saver's move outside the EU, nor does it provide details or the procedures for early withdrawal. For matters not regulated by the PEPP Regulation, PEPPs shall be subject to the laws adopted by Member States in implementation of relevant sectorial Union law and implementation of measures relating specifically to PEPPs and other national laws which apply to PEPPs.
However, Article 20(3) of the PEPP Regulation on Opening of a sub-account stipulates that PEPP savers may continue to contribute to the last sub-account opened, meaning they are not obliged to open a new sub-account once they move to their new Member State of residence. The possibility of continuing to contribute to the last sub-account opened is also relevant where the PEPP provider is not able to ensure the opening of a new sub-account corresponding to the PEPP saver's new Member State of residence.
This could potentially imply that PEPP savers who move outside the EU could still continue to save into their PEPP, that is the last sub-account opened. Alternatively, the saver could also potentially opt for early withdrawal or stop contributing to the PEPP, but only if legal conditions are met and subject to the applicable penalties.
Regarding early withdrawal, Article 2(2) of the PEPP Regulation specifies that the PEPP is a long-term savings personal pension product provided in view of retirement, and which has no or strictly limited possibility for early redemption.
The PEPP Regulation does not provide details or the procedures for early withdrawal, it leaves it to the PEPP provider to define the conditions for it and any penalties or fees to be paid, pursuant to the applicable national legislation and the terms and conditions of the PEPP contract. The consequences of for the PEPP saver of early withdrawal from the PEPP or ceasing contributions, including all applicable fees, penalties, and possible loss of capital protection and possible loss of other advantages and incentives shall be out in the PEPP KID.