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

On 20 November 2025, the European Commission introduced a comprehensive proposal aimed at strengthening supplementary pensions across the EU and streamlining the regulations for sustainable financial products. These initiatives are key elements of the Commission’s broader savings and investments union strategy, which promotes wealth building through capital markets while supporting EU economic growth and competitiveness.

Boosting Supplementary Pensions for Adequate Retirement Income

Acknowledging that public pensions may not always suffice to maintain living standards in retirement, the Commission’s proposal focuses on improving access to supplementary pensions, which complement, rather than replace, national public pension schemes. Key measures include:

• Pension Tracking Systems: Encouraging all EU countries to develop or improve comprehensive pension tracking systems, offering citizens a clear and consolidated view of their pension rights across different schemes.

• Modernising IORP II Directive: Strengthening the Institutions for Occupational Retirement Provision (IORP II) Directive to ensure better management and supervision of pension funds, aiming for stronger returns on savings.

• Enhancing Pan-European Personal Pension Product (PEPP): Making PEPPs more attractive and accessible by removing complex requirements and design features that previously limited their uptake, thus expanding options for supplementary retirement savings.

• Clarifying the ‘Prudent Person’ Principle: Refining investment guidelines for IORPs and PEPP providers to encourage increased investment in equities, supporting higher long-term growth potential for pension assets.

These reforms respect each EU country’s sovereignty over their pension systems while fostering a more robust supplementary pension landscape.

Simplifying Sustainable Finance Disclosure to Combat Greenwashing

The Commission also proposed amendments to the Sustainable Finance Disclosure Regulation (SFDR), aiming to simplify transparency rules and better align them with market realities, benefiting both investors and product providers by reducing compliance costs.

Significant changes include:

• Streamlined Disclosures: Only the largest financial market participants would need to report environmental and social impacts. Product-level disclosures will focus on data that is accessible, comparable, and meaningful.

• Clear Financial Product Categorisation: Establishing three categories to classify ESG products:

  • Sustainable: Investments directly contributing to sustainability goals.
  • Transition: Investments in entities on credible paths towards sustainability.
  • Environmental, Social, Governance Basics: Products employing ESG approaches without fitting the first two categories.

• Restricting ESG Claims: Usage of ESG-related claims in product names and marketing will be limited to products that meet the categorisation criteria, significantly bolstering the fight against greenwashing and increasing trust in sustainable investments.

Next Steps

The proposals regarding supplementary pensions—including amendments to the IORP II Directive and PEPP Regulation—and sustainable finance disclosures will enter negotiations with the European Parliament and the Council before potential adoption.

Additional Resources

• Press Release: Commission proposes to boost supplementary pensions
• Questions and Answers: Supplementary Pensions Package
• Press Release: Simplifying transparency rules for sustainable financial products
• Questions and Answers: Sustainable Finance Disclosure Regulation

This initiative marks a strategic step towards ensuring adequate retirement incomes for EU citizens and fostering a more transparent, trustworthy sustainable finance market aligned with environmental and social objectives.

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