On July 25, the European Union (EU) issued a regulation establishing the Pan-European Personal Pension Product (PEPP), a voluntary retirement savings program for individuals residing in the EU‘s 28 member countries. Under the program, EU residents will for the first time be able to participate in individual accounts that are governed by the same basic rules and are portable across all member countries. The PEPP accounts will complement the public and occupational pensions that provide the bulk of retirement income in the EU and vary by member country. The PEPP will also allow individual account providers to operate and compete in a single personal pension product market covering the entire EU. The EU expects the first PEPP accounts to become available in late 2021.

The key provisions of the PEPP regulation include:

• Investment options: PEPP providers can offer up to six investment options to each participant. The default option—referred to as the Basic PEPP—must be a low-risk investment product that meets certain capital protection standards. Beyond the default option, PEPP providers can offer a wide range of investment products, including alternative investments (e.g., hedge funds, private equity funds, and real estate funds). PEPP providers must allow participants to change their investment selections at least once every 5 years.

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