Work in progress: A European Tracking Service

However, pensions are organized nationally and rules and regulations vary greatly from country to country. Keeping sight of pension entitlements, built up in various countries, is a real challenge. In order to provide more insight into cross-border pensions, the European Commission wishes to create a European pension Tracking Service (ETS). PGGM participated in an international consortium of pension providers, which has developed a business plan and a roadmap for implementation under the name of Track and Trace Your Pension in Europe (TTYPE). On 1 June 2016 these results were presented to the European Commission. In this blog, the key recommendations and the completed business plan for the realization of an efficient ETS are summarized.

With the presentation of its business plan and roadmap, the TTYPE project has been completed. TTYPE is confident that, together with the report from March 2015 (pdf), a solid base for a cross border tracking service had been laid out, which will benefit both EU citizens and the pension industry.

The final report of TTYPE (pdf) shows that establishing a European pension register is feasible and will take approximately four years. First a platform with general information on the different pension schemes in Europe will be created. This will help citizens find their pension providers. After about 1 year this platform will be developed further, providing citizens with their own personalized pension information, building on the expertise of member states that have already established a National Tracking System (NTS). The existing NTSs will be connected, expanding the service year after year.

The connecting strategy might be the following. The Netherlands, Denmark and Belgium are the first countries to be connected to the ETS. These countries have well developed NTSs in place which makes conversion on a European level relatively easy. A year later the Scandinavian countries and Poland will follow. These countries have large amounts of citizens working abroad. In the years following the other countries in the European Union that have a national registry will be connected (France and Austria). The countries with no national registry or with a large amount of pension providers, such as Germany, Spain and Italy will be converted lastly. Regarding the former, especially the UK and Ireland pose a problem, with their respectively 42.000 and 63.000 pension funds. These countries will first have to create an NTS. The final stage requires pension funds across Europe to deliver pension information in a structured data format. Eventually citizens will be able to see all their savings in one spot.

An association of European pension funds and NTSs, needs to be responsible for the implementation and establishment of the ETS. In the business plan this organization has been given the working name STEP. The cost of developing and implementing STEP will be approximately € 20 million. Once STEP is operational, the yearly costs are estimated to be around 3 million Euros. A large part of this money will come from contributions from its members (i.e. the European pension funds). The TTYPE believes an annual contribution of € 0.03 per participant is feasible. For the Netherlands, the bill is expected to be € 46,000 a year.

The initial set up funding TTYPE wishes to receive from the EC. The consortium warns that the ETS will not come into being unless this financing comes through. TTYPE urges the EC to use the existing momentum and follow the proposed plan. The EC has given significant political backing to this initiative and has secured financing for the first stage. The Commission has indicated, by words of the European Commissioner Thyssen, that it will actively work to secure financing for the next stages.

TTYPE stresses that commitment and participation of stakeholders and pension providers across the EU is essential to ensure a successful implementations and eventual financial independence. As one of the members and designers of TTYPE, PGGM is committed to realize this goal, but others need to show the same commitment as well. Later this year the commission will announce a Call for proposals (pdf) to support the first stage of ETS implementation.

For more information on TTYPE, visit www.ttype.eu/pensionstogether.