Excessively burdensome

The EU’s universal pension is on its deathbed

The EU is no stranger to one-size-fits-all regulation, from restricting Ireland’s ability to raise interest rates and avoid financial meltdown to absurd regulations on the shape of fruit and vegetables, which lasted 15 years before the “return of the curvy cucumber”.

Yet few policies have been as disastrous as its idea for an EU-wide pension, the Pan-European Personal Pension Product (PEPP).

Four years after it was created, just 10,000 people have signed up from a working population of almost 260 million.

Despite its noble aim of boosting retirement planning among a sceptical population, the EU itself even described it as “excessively burdensome”.

It's the bureaucratic balancing act the EU has never achieved, staying clear of that zone where chair-polishers render life so excessively burdensome that economies flounder, systems crumble and funding falters. 

Even if we put aside the ingrained problems of bureaucracy, the EU still has major problems over an ageing population and pension provision. Not specific to the EU, but it's one of those huge, steadily evolving problems the EU is poorly equipped to tackle at an EU level.

    

Europe is mired in an ageing crisis: by 2030, a quarter of EU citizens will be over 65 after decades of falling birth rates and rising life expectancy. Two thirds of workers have zero pension savings, adding a potential old age poverty epidemic to the unprecedented strain already facing health and social care services.


A related problem is that EU bureaucrats never seem to give up on dud ideas, never willing to learn from experience, change direction and move on. It's another of those obvious yet serious weaknesses EU enthusiasts tend to avoid.


Despite the extremely disappointing take-up figures, however, the EU is not giving up.

In November, it proposed a series of changes, including removing the advice requirement and 1pc fee cap from Basic PEPPs. A tailored PEPP, offering the more complex and potentially more lucrative investment options some savers seek, would also be available and the requirement to offer membership in multiple countries will also be scrapped.

The intention is also to make the product more suitable to workplaces in the hope that take-up is bolstered by auto-enrolment.

It won't work.