* EU Commission tries to defuse demographic time bomb
* Only a quarter of Europeans have personal pension products
* Proposal estimated to double growth of sector by 2030
BRUSSELS, June 29 (Reuters) - The European Commission proposed on Thursday establishing a new pan-European pension product to increase private savings for old age and boost the growth of an EU industry currently worth some 700 billion euros ($800 billion).
The measure is part of policy efforts to defuse a demographic time bomb that could hit the ageing continent over the next 50 years when the ratio of retirees to working-age people is estimated to double.
As EU states' stretched public finances are already struggling to cover the current levels of pensions, the European Commission is trying to encourage personal savings to make up for lower pensions.
The proposed Pan-European Personal Pension Product (PEPP), if approved by EU states and the EU parliament, will give consumers a new savings option and is expected to increase the number of people subscribing to a personal pension, the Commission said.
Currently only 27 percent of working-age EU citizens have bought personal pensions, which complement occupational and state-funded pensions, setting aside 700 billion euros managed by banks, pension funds or insurances.
The industry is expected to double its size in the EU by 2030, but the Commission said that, with PEPP, assets under management could reach 2.1 trillion euros.
This is expected to benefit countries where there is virtually no market for personal pension products, particularly in eastern Europe. The Commission said that only in Germany, Austria, Slovenia, Spain and Sweden 15 percent or more of eligible consumers made such investments.
Mobile workers, who build their pension in several EU states, could also show interest, although they may face costs for merging the capital accumulated in different countries.
EU countries will remain free to set their tax treatment of PEPP, although the Commission urged them to grant PEPP the same tax relief applied to national products.
PEPP providers will need authorisation from the EU pension regulator, the European Insurance and Occupational Pensions Authority (EIOPA).
Managers of PEPP assets will be free to invest in all assets, including derivatives, as long as they respect consumers' choices when they opt for prudent investment. ($1 = 0.8769 euros) (Reporting by Francesco Guarascio zfraguarascio; editing by Philip Blenkinsop)