European Commission Proposes Reforms to Boost Supplementary Pensions and Simplify Sustainable Finance Rules

On 20 November 2025, the European Commission unveiled a package of proposals aimed at enhancing the effectiveness of supplementary pensions across the EU and streamlining regulations on sustainable financial products. These initiatives align with the Commission’s broader strategy to promote household wealth accumulation, foster economic growth, and reinforce sustainable investments.

Strengthening Supplementary Pensions

Public pensions alone often fall short of providing adequate retirement income. To address this, the Commission’s proposals seek to bolster supplementary pensions, which are designed to complement—not replace—public pension systems. Key measures include:

• Enhanced Pension Tracking: Encouraging EU countries to develop comprehensive pension tracking systems to give citizens clear insights into their pension rights and expected benefits across all schemes.
• IORP II Directive Modernisation: Updating the Institutions for Occupational Retirement Provision (IORP) II Directive to ensure robust management and supervision, aiming to secure stronger returns for savers.
• Improving PEPP Accessibility: Making the Pan-European Personal Pension Product (PEPP) more attractive and cost-effective by removing barriers that have limited its uptake.
• Clarifying Investment Principles: Defining the ‘prudent person’ principle to facilitate increased equity investments by IORPs and PEPP providers, supporting sustainable growth opportunities.

These reforms respect member states’ sovereignty over their pension systems while fostering stronger supplementary pension frameworks EU-wide.

Simplifying Sustainable Financial Disclosure

In addition, the Commission proposes to refine the EU’s existing rules on sustainable financial disclosures to make them simpler, more efficient, and better aligned with market realities. The amendments aim to:

• Reduce Disclosure Burden: Limit environmental and social impact disclosures primarily to the largest financial market participants, and restrict product-level disclosures to relevant, comparable, and meaningful data.
• Categorise ESG Products Clearly: Introduce a clear classification system for financial products with Environmental, Social, and Governance (ESG) claims, categorising them as:
  • Sustainable: Products directly contributing to sustainability goals
  • Transition: Investments in companies/projects progressing towards sustainability
  • ESG Basics: Products integrating ESG approaches without fitting the first two categories
• Combat Greenwashing: Reserve ESG claims in marketing and product names for categorised products, enhancing investor trust and transparency.

Next Steps

The proposed changes to supplementary pensions—including updates to the IORP II Directive and PEPP Regulation—and the Sustainable Finance Disclosure Regulation will now undergo negotiations and approvals by the European Parliament and the Council.

For further details:

• Press release: Boosting supplementary pensions for adequate retirement income
• Detailed Q&A on supplementary pensions package
• Press release: Simplifying transparency for sustainable financial products
• Q&A on Sustainable Finance Disclosure Regulation

This initiative reflects the European Commission’s commitment to fostering financial security in retirement and advancing transparency and trust in sustainable investments—key priorities for a sustainable, inclusive European economy.

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