The EU has not been effective in supporting the development of supplementary pensions, which complement state pensions and help ensure an adequate retirement income for EU citizens, according to a new report by the European Court of Auditors (ECA).
Against the backdrop of an ageing population in the EU, the European Commission and the European Insurance and Occupational Pensions Authority (EIOPA) have, according to the Court, not managed to strengthen the role of occupational, employment-based pensions in EU countries, or get the personal pan-European pension product (PEPP) off the ground.
The newly published ECA report comes at a time when the Commission, under its plans for the Savings and Investments Union, intends to revisit the legal frameworks for occupational pension funds and the pan-European product so as to increase their effectiveness and attractiveness.
Pension schemes play an important role in social protection and strengthening the EU’s capital markets. Although EU countries themselves are responsible for pensions, the EU has regulatory powers regarding cross-border mobility, consumer protection and the internal market.
The report said, “As state pension systems in many EU countries face challenges to maintaining pension adequacy, the EU has set out ground rules for occupational pension funds and laid the foundations for an EU-wide personal pension.”
“In EU economies faced with demographic and fiscal challenges, supplementary pensions should become increasingly important,” said Mihails Kozlovs, the ECA Member in charge of the report. “Unfortunately, neither employer-sponsored pensions nor the EU-wide personal pension have lived up to expectations, especially when it comes to cross-border operation. Extra steps must be taken to strengthen them.”
Currently, despite several Commission initiatives, neither cross-border occupational pensions nor pan-European pension products play a significant role in the EU’s supplementary pensions market.
The ECA said that while institutions for occupational retirement provision are estimated to have around €2.8 trillion in assets under management, and to serve around 47 million workers and pensioners, their cross-border activities remain concentrated in the small number of countries where employer-sponsored pensions were already traditionally rooted.
This, it adds, is mostly due to factors beyond the EU’s remit, but the auditors also point out that the EU has imposed extra requirements for cross-border funds, which puts them at a further disadvantage.
The pan-European pension product has been in effect since March 2022 and should provide an alternative for workers saving for retirement in the form of a portable cross-border product. However, a lack of tax incentives and a regulatory 1% cap on costs and fees have reduced its attractiveness. In 2025, there is only one PEPP on the market. Uptake has been extremely low so far, with fewer than 5 000 savers and less than €12 million in assets under management.
Access to comprehensive pension information is essential for citizens as they approach retirement.
The report says, “However, EU plans to improve transparency under the Capital Markets Union have borne little fruit. An overview of state, occupational and personal pensions, which would help individuals understand their total future retirement income, is still missing.”
“And while EIOPA has initiated measures to improve information about occupational pension schemes, contributors and beneficiaries do not enjoy full transparency regarding the performance of the underlying funds, including the costs to workers and the returns for retirees.”
This, adds the court, is crucial because some pensions depend on investment performance, which is why occupational pension funds must also be supervised effectively. Despite its efforts, however, EIOPA was in no position to ensure consistent supervisory practices across the EU. This is due to the low uptake of its initiatives by national authorities and the minimum harmonisation framework in which EIOPA operates, said the ECA.
