Economy 20 November 2025, 4:35pm

Commission reveals the changes it wants to see in pension systems

Portfolio

The European Commission proposes to boost supplementary pensions to help ensure adequate retirement income, the EU executive said in a statement on Thursday regarding a package of measures adopted today. The proposals include plans for automatic enrolment in pension savings programmes. The Commission also wants to ensure that all citizens are aware of the state pension they can expect to receive in the future.

The European Commission has today adopted a package of measures to help citizens secure adequate income in retirement by improving access to better and more effective supplementary pensions.

The proposed actions aim to complement - not replace - public pensions, which are the foundation of pension systems in all Member States.

Today's package forms part of the Commission's Savings and Investments Union (SIU) Strategy which seeks to

create more opportunities for households to build their wealth through capital markets,
while boosting EU economic growth and competitiveness.

In light of demographic shifts and labour market dynamics, which require pension systems to adapt, supplementary pensions – both occupational and personal pension schemes – can help citizens achieve more diversified retirement income, enhancing financial security and stability when retiring. They can complement the benefits of public pensions which in many cases will not be sufficient to maintain adequate living standards, especially among vulnerable people and women, where

the gender pension gap between men and women currently stands at 24.5%.

"Stronger and more efficient supplementary pension schemes can also contribute to Europe's economic growth and competitiveness by mobilising long-term savings for productive investments," the EC said.

The aim of the proposed measures is to strengthen both the demand for and the supply of supplementary pensions.

The initiatives fully respect Member States' competences to organise and design their national pension systems, as well as the autonomy of the social partners

where they are responsible for establishing and managing pension schemes.

This package builds upon, and supplements, the Commission's other SIU initiatives announced to date, including on financial literacy and the Recommendation on Savings and Investment Accounts, which collectively aim to enhance EU citizens' financial well-

Proposed measurs

The Commission made recommendation on pension tracking systems, pension dashboards, and auto-enrolment into supplementary pension schemes.

The Commission recommends that Member States:

Implement, in line with national circumstances and while fully respecting the role and autonomy of social partners and collective bargaining prerogatives, auto-enrolment i.e. the automatic inclusion of workers in supplementary pensions, with the full freedom for individuals to opt out. This will be guided by existing good practices in the EU and lessons learned from other countries. This is a way to increase participation in supplementary pension schemes and unlock greater scale of supplementary pensions markets;
Further develop comprehensive pension tracking systems to provide citizens with a clear overview of their pension rights and projected benefits across all pensions schemes. Such tracking systems will help address the low participation in supplementary pensions, often due to citizens' limited awareness about their future pension. They should be compatible with the European Tracking Service, supporting cross-border mobility and;
Develop national pension dashboards, for Member States' policymakers to have a better view of the coverage, sustainability and adequacy of their multi-pillar pension system. Those national dashboards would ultimately feed into an EU-level pension dashboard.

The EU executive also made a legislative proposal to amend the Directive on Institutions for Occupational Retirement Provision (IORP) II.

The IORP II Directive set common EU standards to ensure sound management and supervision of IORPs, while respecting the role of social partners. However, many schemes remain too small to diversify their investments and deliver optimal outcomes for savers.
To unlock the potential of occupational pensions, the Commission proposes to strengthen and modernise the framework to better support efficiency, scale and trust in supplementary pensions.
The review enhances the protection of savers and removes barriers to market-driven consolidation and other forms of fostering economies of scale. These measures will help IORPs to operate more efficiently, reduce costs, diversify their investments portfolios including in equity, to deliver stronger returns on citizens' savings. This also contributes to increased financing opportunities for European companies.

A legislative proposal was also made to amend the Pan-European Personal Pension Product (PEPP) Regulation.

The review of the PEPP Regulation seeks to make the Pan-European Personal Pension Product (PEPP) a more attractive, accessible and cost-effective option for savers. It will remove existing requirements and design features that have hampered the take-up of the PEPP, while at the same time continuing to ensure a high level of consumer protection.
The review introduces an affordable and easily accessible “Basic PEPP”, invested in simple financial assets and offered to the public without advice. Savers will also have access to “tailored” PEPPs that may include guarantees and more complex assets, requiring advice to ensure their consumer understanding. As a result, the PEPP will be adaptable to different investor preferences and suitable for various types of providers, including asset managers and insurers. The PEPP will also be open to workplace use and could serve as an auto-enrolment vehicle, where this is allowed under national law and fully respects the prerogatives and autonomy of social partners.

Those changes will ease barriers to provision and distribution, broaden choice for savers, supported by favourable and consistent tax treatment,

as Member States will be required to offer comparable tax treatment between national personal pension products.

Finally, the Commission also clarifies the prudent person principle:

Theprudent person principlegoverns how IORPs and PEPP providers should invest and manage their asset portfolios.

However, this principle has been interpreted and implemented very differently across Member States, which has often constrained pension schemes in their ability to diversify investments, in particular in equity. In line with the SIU Strategy, the Commission Communication adopted today clarifies the principle, with the aim to increase investment into equity – both private and listed –to help citizens earn higher long-term returns on their savings and free up new sources of financing for the EU economy.

As regards the next steps, the EC said that the proposals to amend the IORP II Directive and PEPP Regulation will now have to be negotiated and agreed by the European Parliament and the Council.

The Commission will monitor the implementation of the Recommendation at national level through several mechanisms, including the European Semester. It will promote the exchange of experiences and best practices between Member States.

Background

These measures are in line with recent high-level political statements and reports also underscored the crucial need to mobilise private capital for long-term investment. These include theMarch 2024 statement of the Eurogroupin inclusive format, the European Council conclusionsof both April 2024andMarch 2025, the European Parliament'sSeptember 2025 competitiveness report, and theLettaandDraghireports. Given the long-term nature of pensions' liabilities, the supplementary pension sector can be a key potential supplier of long-term capital for investment in the EU economy. In theCompetitiveness CompassandSavings and Investments Union (SIU) Strategythe Commission committed to put forward measures to unlock this potential.

Our goal is clear: everyone should be able to maintain good standard of living in retirement. This is why we have adopted a comprehensive approach to strengthen supplementary pensions to complement, not replace, public pensions,

stated Maria Luís Albuquerque, Commissioner for Financial Services and the Savings and Investments Union.

"Our measures will give Europeans better tools to plan for old age with confidence, while also unlocking new sources of funding to boost the EU economy. I urge all stakeholders, including Member States, to join our efforts, as effective implementation at national level will be critical to achieve those shared objectives," she added. The commissioner previously spoke to Portfolio; you can read our interview here.