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

On 20 November 2025, the European Commission unveiled a comprehensive set of proposals aimed at strengthening supplementary pensions across the EU while simplifying regulations for sustainable financial products. These initiatives are part of the Commission’s broader strategy to enhance retirement income security and promote sustainable investment, aligning with the EU’s goals for economic growth and environmental responsibility.

Enhancing Supplementary Pensions for Adequate Retirement Income

Recognizing that public pensions alone may be insufficient to maintain living standards in retirement, the Commission’s proposals focus on improving access to and the quality of supplementary pensions, which complement existing state systems without replacing them. Key highlights include:

• Pension Tracking Systems: Encouraging member states to develop integrated tracking systems that provide citizens with a clear, consolidated overview of their pension rights and expected benefits across multiple schemes.
• Modernizing IORP II Directive: Strengthening the Institutions for Occupational Retirement Provision (IORP) framework to ensure better management and supervision, ultimately aiming for stronger returns on pension savings.
• Revamping Pan-European Personal Pension Products (PEPP): Removing overly restrictive requirements to make PEPPs more attractive, accessible, and cost-effective for savers.
• Clarifying Investment Principles: Refining the ‘prudent person’ rule to encourage pension providers to increase investments in equities, both private and listed, to potentially boost long-term returns.

These measures respect the autonomy of EU countries in organizing their pension systems while fostering a harmonized approach to improve supplementary retirement savings.

Simplifying Rules on Sustainable Financial Products

The Commission also proposes amendments to the Sustainable Finance Disclosure Regulation (SFDR) to enhance clarity, efficiency, and market alignment in financial products integrating environmental, social, and governance (ESG) goals. Proposed changes include:

• Streamlined Disclosures: Limiting detailed environmental and social impact disclosures to the largest financial market participants and significantly reducing product-level disclosure requirements to relevant, comparable, and accessible data.
• Clear ESG Product Categorization: Introducing three distinct categories to classify financial products making ESG claims:
  • Sustainable: Products directly contributing to sustainability goals.
  • Transition: Investments targeting entities on credible sustainability transition paths.
  • Environmental, Social, Governance Basics: Products incorporating ESG approaches but not fitting the other categories.
• Combating Greenwashing: Reserving ESG-related claims in product names and marketing materials only for properly categorized products to enhance transparency and investor trust.

Next Steps

The proposed revisions to supplementary pensions, IORP II Directive, PEPP Regulation, and SFDR will undergo negotiations with the European Parliament and Council before potential adoption.

For More Information:

• Commission Press Release on Supplementary Pensions
• Q&A on Supplementary Pensions Package
• Commission Press Release on Sustainable Finance Disclosure
• Q&A on Sustainable Finance Disclosure Regulation

These initiatives demonstrate the EU’s commitment to securing adequate retirement incomes for its citizens while advancing sustainable finance that supports a greener, more transparent economy.

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