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Finax has been offering the European Pension Plan (PEPP) for almost four years now, primarily in its main market, in Slovakia. Since its inception PEPP has drawn significant attention and an increasing number of users are beginning to discover its numerous advantages. In three years, over 240 enterprises in Croatia have made the decision to contribute to their employees' European pensions, and this figure is still rising.
Secure a comfortable future and take advantage of the European pension benefits
We have chosen to respond to the latest inquiries that are being raised in reaction to the increased interest in the European Pension Plan (PEPP). We would like to highlight portability as one of the main benefits of the European pension in this blog. To help you understand this feature, we will address the most frequently asked questions and provide specific examples. Firstly, let us present the fundamental PEPP principles.
Your residence is essential to opening a PEPP subaccount. You should register a subaccount if you live in Ireland. You have the option to create a new subaccount for your new country of residence or to preserve your old one whenever you relocate inside the EU. Local regulations govern each subaccount, which also has varying terms for withdrawal and tax benefits. PEPP offers a highly adaptable contribution structure as well. Your company may make a direct contribution to your PEPP, or you may do so. You can also easily change the quantity of your contributions and stop or resume them. The minimum deposit of €10 is the only requirement.
Frequently Asked Questions About PEPP Portability in Ireland and Across the EU
1. I cannot find a PEPP provider in my country. Is it possible for me to open a subaccount in another country?
You should create a PEPP subaccount that corresponds to your country of residence. It could be your country of permanent or temporary residence. Finax will crosscheck at least one of the parameters to open a PEPP subaccount inside a given country upon registration.
2. Is it possible for me to get a PEPP regardless of my nationality?
Yes, PEPP is provided regardless of your nationality. It is the country of residence that is crucial for opening PEPP subaccount.
3. I live in a country outside the EU. Is it possible for me to open a PEPP account?
You should open PEPP subaccount that corresponds to your country of your EU residence. It can be the country of your permanent residence or temporary residence. Finax will crosscheck at least one of the parameters to open a PEPP subaccount inside a given country upon registration. If your permanent or temporary residency is entirely outside of the EU, we are unfortunately unable to offer you PEPP under current circumstances.
You should only open a PEPP account in the country where you reside. It does not matter whether the residence is permanent or temporary. In the country where you intend to live, you should have at least one of those to open a PEPP subaccount.
4. What happens to my PEPP account if I move to another EU country? Do I need to transfer it to the new country?
Few decisions must be made by the client when relocating to a new nation within the EU. You can choose whether you want to start a subaccount in the new country you are moving to or continue contributing to the last subaccount you opened. If Finax is offering a subaccount in your new country of residence, Finax will advise you on what is more beneficial to you. If Finax does not provide PEPP subaccounts in the country where you are relocating, you can either keep your previous subaccount or transfer to a new PEPP provider without incurring any fees. The new PEPP provider, however, must supply PEPP subaccounts in every country you already have opened a subaccount.
5. They offered me an opportunity to work in another EU country for a year. Will I have to transfer my PEPP savings?
You are not required to transfer funds from your PEPP subaccount. You can continue to contribute to your most recently opened subaccount, but this may not always be the most tax-efficient option for you. Your options are also influenced by your current PEPP provider. If they offer PEPP subaccounts in the country you moved to, you can either open a new one or keep the existing one. If they do not offer PEPP subaccounts in the country you have relocated to, you can either keep your previous subaccount or switch PEPP provider without paying any fees. The new PEPP provider, however, has to offer PEPP subaccounts in every country where you already have a subaccount.
6. Can I continue to save in a PEPP if my employment situation changes?
Yes, even if your professional status changes, you can continue to save in a PEPP. You can save with or without employer contributions. You can also pause and resume your savings at any point in time.
7. I worked in Italy, where I saved for PEPP, and then relocated to Spain, where I lived until retirement. However, my pension stayed in Italy, and I'm not sure under whose regulations I may withdraw it.
In compliance with Italian law, you may withdraw funds from your Italian subaccount. If you have both Italian and Spanish subaccounts, you will take savings from the Italian subaccount in accordance with Italian law and savings from the Spanish subaccount in accordance with Spanish law.
8. I moved from Ireland to the Netherlands, but I'd like my employer to continue contributing to my Irish PEPP account. Is this an option?
Yes, if you move across Europe, you can keep your Irish subaccount, and your company can contribute to it. However, this may have an impact on the availability of local tax benefits.
9. I work in a position that requires me to move frequently (I only stay in a country for a few years); how does the portability feature work for me, because I believe I can only change providers every five years?
If your current provider does not provide a respective subaccount, you can switch providers with each move free of charge, regardless of the 5-year period. Your choices are determined by your current PEPP provider. If they offer PEPP subaccounts in the country you moved to, you can either open a new one or keep your existing one. If they do not offer PEPP subaccounts in the country you have relocated to, you can either keep your previous subaccount or switch PEPP provider without paying any fees. However, the new PEPP provider must supply PEPP subaccounts in all countries where you already have subaccounts.
We advise against opening new subaccounts in each nation you intend to relocate to, as this may complicate future withdrawals. Finax will advise you on whether or not to open a new subaccount. The most crucial aspect in this regard is the tax benefits. However, in many jurisdictions, local tax benefits may also apply when you contribute to your home country subaccount, which can be a significant benefit.
10. I am Irish with a permanent address in Ireland, where I currently reside. I work for a Dutch firm. I travel to the Netherlands three days per week for work, and the other two days I work remotely from home in Ireland. What PEPP subaccounts am I allowed to open? Can my employer contribute to the Irish and Dutch subaccounts?
Since you live in Ireland, you should register an Irish PEPP subaccount, and your employer should contribute to the Irish subaccount as well.
11. I am an Irish national with a permanent address in Ireland and a temporary residence in Poland. Can I contribute to a Polish PEPP subaccount?
You certainly can. You should, however, only open a PEPP subaccount in the country where you live. It is unclear whether permanent or temporary residence is required. In the country where you want to open a PEPP subaccount, you should have at least one of those.
12. During my career, I have worked in several EU countries and saved in three separate subaccounts. I'm going to retire in the last country where I've worked. Will PEPP provide me with three pensions? Can I transfer my savings to the subaccount of my previous address and earn a single pension under the laws of the country in which I now reside?
You cannot combine your subaccounts. Technically, you will receive three pensions based on the rules of three different countries. Finax will send you one payment every month, and that is all that matters. The logic is that your pension age may differ for each of the three subaccounts. You may even withdraw all your savings from one subaccount before you are permitted to withdraw savings from the other two subaccounts.
13. I am a Pole and I live in Poland. I´ve opened a Polish PEPP sub-account in which I can contribute up to € 5,100 per year, and all my income will be tax-free until I retire. In a few years, I want to relocate to Italy, where I will be able to deduct my contributions from my tax base. So, there is no tax on contributions, but I must pay taxes on income once I withdraw. Can I continue to contribute to the Polish sub-account where I do not pay tax on withdrawals while living in Italy?
Indeed, if you intend to retire in Poland, this is one of the most effective ways to use PEPP. This way, you can deduct € 5,100 from your tax in Italy and contribute them towards the Polish subaccount, and once you retire and withdraw money while living in Poland, you won't have to pay any tax.
The tax treatment is determined by each client's unique circumstances and is subject to change in the future.
Secure a comfortable future and take advantage of the European pension benefits
Finally, the European Pension Plan (PEPP) has been shown to be a highly effective and versatile retirement savings tool. Savings portability is a significant advantage of PEPP, allowing users to remain flexible and adapt their pension plan to their life changes, such as relocating across EU nations. This personal pension option allows people to be confident that their pension will follow them regardless of where they live or their career path.
Furthermore, PEPP has drawn the interest of both individuals and businesses in the European Union. The number of companies that choose to contribute to PEPP for their employees is expanding, indicating an increasing recognition of the benefits of this product.
We should expect the European pension to become an increasingly essential part of retirement preparation for European residents in the future. This product will be used by an increasing number of people to attain their retirement goals while maintaining a high level of flexibility and security. Finax is happy to have become the first to offer PEPP and continues committed to assisting its customers in reaching financial security in retirement.
