Europe’s pension landscape is at a critical juncture and progress is needed to ensure the system is resilient, inclusive, and adequate across the Euopean Union (EU), PensionsEurope has stated.

In its latest paper setting out its 2024-2029 policy priorities for the new European Parliament and European Commission, PensionsEurope outlined the ‘crucial principles’ to address Europe’s key challenges and the role funded pensions should play.

It noted that, between now and 2029, an updated approach to pensions was required to address ageing demographics, economic uncertainty, and changing working patterns.

To provide access and adequate provisions, the report emphasised the need for greater pension coverage, the closure of existing gaps, and for ensuring positive outcomes, with funded pensions as a crucial part of the solution.

PensionsEurope said it was important that access to pensions was easy and rules were simple, that coverage of occupational pensions increases with effective strategies, and that the EU works to continue expanding access and making personal pensions more flexible, affordable, and understandable.

Furthermore, it called for the EU to encourage member states to provide tax incentives for employers and employees to contribute to occupational pensions, and for contribution rates to be adequate, and to promote pension tracking systems.

“The EU should raise awareness of the importance of pension savings as pay-as-you-go social security pensions will not provide the same level of benefits in the future as before,” the association said.

“Many people are unaware of how funded pensions work and their advantages. The EU should promote various means to improve information about pensions and projected retirement benefits. For that purpose, national and European tracking services can play an important part. Additionally, financial literacy is crucial.”

The paper also advocated for a good balance between member states’ policies and European policies, ensuring that pension funds benefit from the single market, and stressed the importance of maintaining minimum harmonisation in sectorial legislation while considering the specificities in other horizontal legislation.

It called for the IORP II Directive to remain as a minimum harmonisation legislation so it can adapt to the diversity of pension systems, for the EU to continue developing a robust and sustainable finance framework, to adopt legislation on withholding taxes (the FASTER initiative), and for proper impact assessments to be conducted before pension funds are obliged to apply to new EU regulations.

“In all member states, pensions play an important part of the social security system and there, rightly, is no uniform European model of how they should be organised,” PensionsEurope said.

“The EU needs to promote different types of funded pensions as a crucial component for ensuring adequate retirement income and sustainable public finances.”

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