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

On 20 November 2025, the European Commission unveiled a comprehensive package aimed at boosting supplementary pensions and refining rules for sustainable financial products across the EU.

Strengthening Supplementary Pensions for Adequate Retirement Income

Recognizing that public pensions alone may fall short in maintaining retirees’ living standards, the Commission proposes targeted measures to improve access and effectiveness of supplementary pensions. These pensions are designed to complement—not replace—national public pension schemes.

Key initiatives include:

• Enhancing Pension Tracking Systems: EU countries are encouraged to develop comprehensive systems that offer citizens clear overviews of their pension rights and expected benefits across all schemes.

• Modernizing IORP II Directive: Strengthened prudential supervision of Institutions for Occupational Retirement Provision (IORPs) will aim to deliver stronger returns for pension savers through sound management.

• Boosting the Appeal of PEPPs: The Pan-European Personal Pension Product (PEPP) will be made more accessible and cost-effective by removing onerous requirements that have hindered uptake.

• Clarifying the ‘Prudent Person’ Principle: Providing clearer investment guidelines will encourage IORPs and PEPP providers to increase investments in equities, both private and listed.

These reforms align with the Commission’s broader Savings and Investments Union strategy, intended to expand household wealth accumulation and enhance EU economic competitiveness, while respecting member states’ autonomy over pension systems.

Simplifying Sustainable Finance Disclosure to Enhance Market Clarity

The Commission also proposes amendments to the Sustainable Finance Disclosure Regulation (SFDR) to make disclosure rules more straightforward, efficient, and market-aligned. The goal is to empower investors with clearer, more trustworthy information while reducing unnecessary compliance costs for financial product providers.

Key changes include:

• Streamlined Disclosure Requirements: Only the largest financial market participants will need to disclose environmental and social impacts, while product-level disclosures will focus on data that is available, comparable, and meaningful.

• Clear Categorization of ESG Products: Financial products will be classified into three groups:

  • Sustainable: Contributing directly to sustainability goals

  • Transition: Supporting companies/projects on credible paths to sustainability

  • Environmental, Social, Governance (ESG) Basics: Incorporating ESG factors without fitting the first two categories

• Tackling Greenwashing: Use of ESG labels in product names and marketing will be strictly limited to categorized products, reinforcing investor trust.

Next Steps

The proposed amendments to the IORP II Directive, PEPP Regulation, and SFDR will undergo negotiation and approval by the European Parliament and the Council.

Sources and Further Reading

• European Commission Press Release (20 November 2025): Boosting Supplementary Pensions
• Questions and Answers on Supplementary Pensions Package
• Press Release on Simplifying Sustainable Finance Disclosure
• Questions and Answers on Sustainable Finance Disclosure Regulation

These initiatives mark significant progress in securing more robust retirement incomes and fostering transparency in sustainable investments, aligned with the EU’s goals for social fairness and environmental responsibility.

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