The EU should focus on increasing coverage and strengthening paritarian occupational pensions, the European Association of Paritarian Institutions (AEIP) has argued, due to their “critical” role in strengthening Europe’s savings and investment landscape.

The comments were made in response to the European Commission’s call for evidence on the Savings and Investment Union, in which AEIP expressed its support for the initiative's aim of leveraging Europe’s private savings to advance broader economic and social objectives.

However, AEIP argued that despite EU households accumulating significant savings compared to the US, the financial sector does not channel them efficiently to productive investment or allocate sufficient capital to innovation in the EU economy, resulting in citizens not receiving adequate returns on their savings.

The association emphasised that occupational pension saving through pension funds is the most successful way to give people access to financial market investments and sound management of risks and returns.

To enhance the reach and sustainability of occupational pensions, AEIP suggested reinforcing industrial relations and enhancing the role of social partners in shaping pension policies through collective agreements, which could lead to an increase in mandatory or quasi-mandatory occupational pension plans.

In addition to this, the AEIP emphasised that expanding occupational pensions would offer a more sustainable and equitable approach to securing Europeans' financial futures in retirement while upholding the European social model.

To achieve this, AEIP recommended the promotion of tax incentives to encourage both employers and individuals to participate in occupational pension schemes.

Additionally, the association stressed the importance of promoting knowledge exchange among Member States regarding effective pension policies and financial incentives.

AEIP executive director, Simone Miotto, urged the European Commission to recognise the unique nature of occupational pension schemes.

He noted that EU policies must respect national competencies and the diversity of pension systems across Member States.

“Paritarian pension funds ensure good governance, foster transparency, and uphold compliance with the prudent person rule while guaranteeing employer contributions. These principles are fundamental in strengthening trust and confidence in long-term financial planning,” Miotto said.

In addition to this, Miotto suggested that a “well-functioning” capital markets union could provide pension schemes with better access to diverse sources of capital across the EU.

He said this, in turn, would help paritarian institutions reduce costs, improve portfolio performance and optimise risk management, leading to greater social protection benefits for fund members.

In its response, AEIP said EU policymakers must recognise the specificities of paritarian pension funds and create a financial environment that attracts targeted investments within the EU single market.

However, the association cautioned against placing pressure on pension funds to prioritise EU competitiveness at the expense of their primary social mission - delivering adequate and sustainable pensions for European workers.

“AEIP remains committed to engaging in constructive dialogue with the European Commission to identify initiatives that attract more investments while safeguarding the long-term objectives of pension funds and ensuring good pension outcomes for members and beneficiaries,” Miotto stated.

Furthermore, the association acknowledged that pension tracking services, and an EU-wide pension dashboard can help address pension gaps.

“We believe the European Commission should encourage Member States to establish national pension tracking systems or similar tools covering all three pillars,” it said.

AEIP also warned against excessive reporting requirements and administrative burdens that could negatively impact the efficiency and sustainability of pension funds.

“While acknowledging the importance of reporting, it is crucial to ensure that regulatory frameworks across the EU embrace the principle of proportionality adequately and coherently, respecting a minimum harmonisation approach,” it said.

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