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

Enhancing Retirement Income through Supplementary Pensions

On 20 November 2025, the European Commission unveiled a comprehensive proposal aimed at improving access to supplementary pensions across EU member states. Recognizing that public pensions alone may not suffice to maintain adequate living standards in retirement, the Commission’s package intends to complement—not replace—existing public pension schemes.

Key objectives include:

• Strengthening demand and supply for supplementary pensions.
• Respecting each country’s autonomy over pension system organization.
• Supporting the broader savings and investments union strategy to enable households to grow wealth via capital markets, thereby boosting EU economic growth and competitiveness.

Main Initiatives:

• Pension Tracking Systems: EU countries are encouraged to develop comprehensive tracking systems offering citizens a clear overview of their pension rights and expected retirement benefits across all schemes.
• IORP II Directive Modernisation: Enhancements to the Institutions for Occupational Retirement Provision (IORP) II Directive will ensure sound management and supervision, aiming for stronger returns on citizens’ pension savings.
• PEPP Improvements: The Pan-European Personal Pension Product (PEPP) will be made more attractive, accessible, and affordable by removing barriers that have hindered uptake.
• Investment Principles Clarified: The ‘prudent person’ principle guiding investments for IORPs and PEPP providers will be refined to encourage increased equity investments, both private and listed.

Simplifying Sustainable Financial Disclosure Rules

Alongside pension reforms, the Commission proposed amendments to the Sustainable Finance Disclosure Regulation (SFDR), targeting improved clarity, efficiency, and market relevance of sustainability-related disclosures in financial products.

Key Changes:

• Simplification of Disclosures: Only the largest financial market participants will need to disclose their environmental and social impacts. Product-level disclosures will be limited to essential, comparable, and meaningful data.
• Clear Product Categorisation: Financial products making environmental, social, and governance (ESG) claims will be categorized into:
  • Sustainable: Products contributing directly to sustainability goals.
  • Transition: Investments in companies/projects on credible paths to sustainability.
  • ESG Basics: Products incorporating ESG principles without fitting other categories.
• Fighting Greenwashing: ESG claims in product names and marketing will be restricted to categorised products, strengthening trust and transparency in sustainable investments.

Next Steps

The proposed amendments to supplementary pension rules (IORP II Directive and PEPP Regulation) and sustainable finance disclosure will undergo negotiations and require approval by the European Parliament and the Council.

For further details, consult the European Commission’s official press releases and Q&A documents on supplementary pensions and sustainable finance disclosure available on their website.

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