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

On 20 November 2025, the European Commission unveiled a comprehensive proposal aimed at enhancing supplementary pensions and streamlining regulations on sustainable financial products. The initiative addresses the growing need for supplementary pensions to ensure adequate retirement income alongside public pensions across EU Member States.

Strengthening Supplementary Pensions

Recognising that public pensions may be insufficient for maintaining living standards in retirement, the Commission’s proposals focus on expanding and improving supplementary pension schemes without encroaching on national pension system sovereignty. Key measures include:

• Development of Pension Tracking Systems: EU countries are encouraged to implement or enhance comprehensive pension tracking systems. These tools will provide individuals with transparent and consolidated information about their pension rights and expected benefits across various schemes.

• Modernisation of the IORP II Directive: Strengthening management and supervision of Institutions for Occupational Retirement Provision (IORPs) to ensure safer, more effective pension funds that deliver stronger returns.

• Enhancement of the Pan-European Personal Pension Product (PEPP): Making PEPP more attractive and accessible by eliminating certain cumbersome requirements and design features that have limited uptake.

• Clarification of the ‘Prudent Person’ Principle: Revising investment guidelines for IORPs and PEPP providers to encourage increased allocation to equity investments, including both private and publicly listed equities, thereby potentially improving pension yields.

These pension-related reforms form part of the broader “Savings and Investments Union” strategy aimed at empowering households to build wealth through capital markets and supporting economic growth and competitiveness in the EU.

Simplifying Sustainable Financial Disclosure Rules

In parallel, the Commission has proposed amendments to the rules governing sustainable finance disclosures, which target financial products with environmental, social, and governance (ESG) objectives. The proposals seek to increase efficiency, reduce costs, and enhance clarity for investors, including:

• Simplified Disclosures: Only the largest financial market participants would be required to disclose their environmental and social impacts comprehensively. Product-level disclosures will be limited to available, comparable, and meaningful data.

• Clear Categorisation System for ESG Products: Financial products will be classified into three categories:

  • Sustainable: Contributing directly to sustainability goals.
  • Transition: Investing in companies/projects moving toward sustainability.
  • ESG Basics: Incorporating ESG factors but not fitting the first two categories.

• Enhanced Protection Against Greenwashing: Only products that fit these categories will be allowed to use ESG claims in names and marketing, reinforcing trust and transparency in sustainable investments.

Next Steps

These legislative proposals—including amendments to the IORP II Directive, PEPP Regulation, and the Sustainable Finance Disclosure Regulation—will now be subject to negotiations between the European Parliament and the Council.

For More Information

• Press release on supplementary pensions
• Press release on simplifying transparency rules for sustainable financial products
• Questions and answers on the supplementary pensions package
• Questions and answers on Sustainable Finance Disclosure Regulation

The European Commission’s proposals reflect a strategic commitment to reinforce financial security for EU citizens in retirement and drive confidence in sustainable investment practices, thereby supporting a resilient and forward-looking economy.

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