The Pan-European Individual Pension Product (OIPE), also known as the European Pension, more than a year after its debut in Poland, already has 5,000 active customers. The new solution is intended to provide European Union citizens with new opportunities to save for retirement. An average Polish client has accumulated over PLN 19,000 in his PEPP account.
The Pan-European Individual Pension Product (PEP) is a voluntary form of pension security whose aim is to provide additional income in old age, in addition to pensions state. Like IKE, PEPP gives you the opportunity to invest without the so-called Belka tax.
As reported in a press release by Finax, which offers PEPP in Poland, there are currently 5,000 in our country. active PEPP customers.
Pension for EU citizens
The Pan-European Individual Pension Product is a solution adopted by the European Union authorities in response to negative demographic trends. The product is intended to respond to the need for mobility of citizens and facilitate the ability to save regardless of the country in which you reside at various stages of your professional career.
The PEPP is based on the assumption that more than 11 million EU citizens of working age (20 to 64 years old) live in a Member State other than their country of nationality and 1.3 million EU citizens work in a Member State other than their country of residence. PEPP was introduced, among others, in order to increase the number of people saving in individual pension products, especially those who have not been able to use an adequate solution so far.
Anyone can benefit from PEPPwho does not want to rely solely on the state pension. We are talking about both those who do not yet save in the third pillar and are looking for a way to invest for the long term without having to pay capital gains tax, as well as those who already have IKE and IKZE, but are looking for an additional option to save for retirement.
The European Pension is offered by Finax in two variants: 100/0 (composed of 100% equity ETFs) and 80/20 (composed of 80% equity ETFs and 20% bond ETFs).
– People who decided to choose the European Pension in the 100/0 variant recorded an annual profit of 24.2%. More conservative savers using the 80/20 option earned 20.7%. Such a high rate of return is the result of perfect timing, because the stock market was breaking records in these months. These excellent results are due to coincidence rather than intentional action, because we launched our product immediately after obtaining the appropriate license. Investing always involves risk – said Przemysław Barankiewicz, director of the Finax Branch.
– However, based on historical rates of return, we assume that the average long-term profit from the 100/0 European Pension portfolio will be approximately 9%. per year, which is still well above the average level inflation. Over the last 20 years, the annual average has been less than 3.5%. I refer to inflation because European Unionwhen inventing the PEPP, its goal was to beat inflation in the long term, that is, at least to maintain the real value of our money – he added.
PEPP customers' savings are growing
According to Finax data an average client has accumulated PLN 19,143 on his PEI account. Almost everyone made a profit (97.5% of customers). The average age of a PEPP participant is currently 40, and every fourth person in this group is a woman. 88 percent clients have PEPP in the variant consisting only of equity funds.
In Poland, everyone can have three individual pension products at the same time: PEPP, IKE (Individual Retirement Account) and IKZE (Individual Pension Security Account). The annual limits for contributions to PEPP and IKE are identical and in 2024 they amount to PLN 23,742 each. PEPP, like IKE, allows you to invest without capital gains tax (the so-called Belka tax), as long as the withdrawal takes place after the participant reaches the age of 60. Of course, you can invest for much longer.
Assuming 20 years of investment, payments equal to the annual limit for 2024 (PLN 23,472), an average annual rate of return of 8%. and the “Belka tax” rate of 19 percent, each PEPP participant will be able to save an average of over PLN 130,000 on tax alone. zloty.
– It is worth paying attention to the opportunity that exists for current IKE holders. If someone is not satisfied with the results achieved in IKE, they can transfer the entire funds accumulated there to the PEPP and then they are not covered by the annual limit – adds Przemysław Barankiewicz, director of the Finax branch.
Main photo source: Shutterstock