A Slovak company first to offer a pan-European Personal Pension Product (PEPP) to the Croatian market
Published on 10 February 2023
The adoption of the Act Implementing Regulation (EU) 2019/1238 on a pan-European Personal Pension Product (PEPP) in late 2022 led to the fulfilment of legal preconditions for the creation of a new, pan-European Pension Product. This new model of voluntary pension savings will benefit citizens working in several EU Member States as they will be able to transfer their pension rights from one Member State to another, but also those who wish to make payments into a different voluntary pension savings model. The PEPP does not replace the existing national statutory and occupational pension systems and products, nor does it align or affect them.
It can be offered not only by pension companies, as in the case of voluntary pension savings, but also by pension insurance companies, institutions for occupational retirement provision from other Member States, as well as banks, investment firms and insurance companies.
The Slovak investment firm Finax was the first company to use the possibility of offering such products, and it is therefore also the first company authorised to provide such services in the Republic of Croatia. It was registered in Slovakia, after which it has carried out the notification procedure with the Croatian Financial Services Supervisory Agency (Hanfa).
The company will offer citizens two long-term savings models, while investing contributions in investment funds traded on the stock exchange (exchange traded funds – ETFs). Within the PEPP 100/60 model, the company will invest the entire assets in equity ETFs, and within the 80/60 model, 80% of the assets will be invested in the equity market, and 20% of the assets in the bond market.
Ten years before the planned retirement, a part of equity ETFs will start to be gradually sold and replaced by bond ETFs; therefore, savings in both models will be exposed both to equity and bond markets. There are no entry or exit fees, and the annual management cost amounts to 0.72% of the accumulated savings.
Any company that intends to offer this financial product to the market is obliged to obtain a licence from the Home State regulator, after which it will be entered in the PEPP central register at the EU-level by EIOPA. As regards other countries, it is necessary to undergo the notification procedure with the competent authority - Hanfa in Croatia.
It is important to note that all investors intending to purchase the PEPP should ask and examine the PEPP key information document (KID) that provides information on PEPP significant features, from costs to potential investment gains/losses, as well as a brief description of its risk profile.
Given that this product represents a new type of voluntary pension savings, on 15 February 2023, Hanfa will hold an online lecture on this topic free of charge. More information on the lecture is available here.
