Some edges still need smoothing out, but Allan Polack, chief executive of the largest pension fund in Denmark, PFA, is overall favorably disposed to the European Commission's new proposal for a new pan-European pension product.

"This shows the Commission's intention to carry through with something that has been discussed for a long time, something that was part of the capital market plan. It is proof of a certain commitment and a pretty clear timetable – the details can be finalized at some point during the second half of 2017," he tells FinansWatch.

That being said, Polack sees a number of counter arguments for PFA joining in with the selling of pension products to the European public.

Chance of more euro in the cash pile

Last week, the European Commission presented its proposal for a pan-European pension product. The product will first and foremost ensure change for the inhabitants of countries where saving for retirement is not yet common practice. For this reason, the product will not have much effect in Denmark, which has one of the world's most well-established pension systems.

However, the proposal could still prove interesting to larger commercial pension funds in Denmark, as they would get a considerable amount of euro under management should they choose to sell the product outside Denmark.

PFA is still choosing to wait for more details on the exact nature of the pension product before the company volunteers to sell the product.

Now that you have some more details to look at, will this be of interest to PFA?

"It's too early to say," says Polack.

Not the main point on the agenda

What criteria would make this interesting to PFA?

"If the processes behind it are digital. This goes for distribution, updating and transfer."

Do you expect that to happen?

"We will see within the next six months. I don't think the proposal gives away much. It's a question of making it interesting, and in order to do that, it has to work efficiently in our system, and it has to create value for our customers," says Polack.

Could it potentially be interesting for PFA to reach abroad?

"Maybe. It's not the main point on our agenda. But it is, of course, something that we are considering — searching for opportunities.”

Do you believe that PFA could compete with foreign players?

"The Danish pension structure and our products are definitely competitive in comparison to, for example, continental Europe," Polack says.

Guarantee reduces competition

One of the biggest challenges that Polack sees in the proposal is that the product will contain a guarantee of zero percent returns. This reduces the pension market's competitive strength, he says.

"Schemes with guarantees are difficult to move. There's a risk of ruining the market's competitiveness. And that was the whole point to begin with: Get the whole pension market competing so the money goes where it is managed best," he says.

So you fear that pension customers could get stuck with the pension scheme they chose to begin with?

"Yes. And ultimately, that begs the question of whether customers will even want to start saving. If you feel stuck with one choice, you might not want to choose at all. I think this point needs more work," says Polack.

Denmark's second-largest pension fund, Danica, will not comment on the pan-European pension product's appeal.

"We have read the European Commission's proposal with great interest. It is positive that the need for pension savings is being put into focus in Europe. Denmark doesn't have the same challenges to face that many other European countries have. We already have elaborate occupational pensions, and a relatively large proportion of Danes are saving for retirement," Mads Moberg Bjørnsen, senior economist at Danica Pension, writes in an e-mail to FinansWatch.

FinansWatch was unable to get any comment from Nordea Liv & Pension.

English Edit: Marie Honoré