Newly elected Arbeitsgemeinschaft für betriebliche Altersversorgung (aba) chair, Beate Petry, explains why the European Commission’s proposed IORP II reform threatens established occupational pension systems in Germany

In November 2025, the European Commission (EC) published the Supplementary Pension Package, comprised of proposals to amend the IORP II Directive as well as the Pan-European Personal Pension Product (PEPP) regulation.

This reform package needs to be understood in the context of the wider Savings and Investments Union (SIU) agenda, through which the EC seeks to mobilise the savings of EU citizens to boost the European economy.

Funded pensions are considered a key instrument for the SIU: By encouraging citizens to invest their savings in pension products and schemes, the EU’s economy gains access to a deeper capital market while retirement adequacy for its citizens is enhanced.

However, the pension package is clearly skewed towards mobilising capital for the EU economy, while improving retirement outcomes appears to be merely an afterthought.

The primary goal of the IORP II proposal is to scale up the regulated institutions through consolidation, as the EC apparently wrongly believes that only very large institutions have the capacity to make the desired investments, notably private equity and, in particular, venture capital.

Hence, the EC essentially proposes abandoning the minimum harmonisation approach that has previously characterised IORP II, including by enabling the EC and the European Insurance and Occupational Pensions Authority (EIOPA) to adopt level II and III regulation, and by drastically increasing regulatory requirements for Iorps while at the same time reducing proportionality.

The fact that smaller institutions have also developed techniques for productive investment, and that Iorps currently invest a larger share of their portfolio in asset classes desired by Brussels than insurance companies regulated by Solvency II, is apparently ignored.

The pension landscapes in the member states have evolved and each system has developed its own balance, with differently weighted roles of the three pension pillars. Pension policy therefore rightfully remains a member state competence.

In several member states, there are no Iorps, and among those that have Iorps, there is great variety. Additionally, labour, social and tax law, all of which remain prerogatives of the member states, directly affect occupational pensions.

Hence, the IORP II Directive has rightfully been designed with a minimum harmonisation approach. If, however, the proposal is adopted in its current form, this flexibility will largely be gone, and Iorps will be confronted with unfitting and costly regulation.

For instance, the IORP II proposal seems to be largely tailored to individual DC systems in which members can select a provider and pension scheme and/or are in a position to take investment decisions.

Occupational pensions in Germany, however, are without exception characterised by a collective approach, in which employees access their pension scheme via their employment relationship and key decisions are taken in the relevant bodies of the Iorp, in which employee and employer representatives are involved.

In conclusion, we stress that the implementation of the EC’s proposal would retroactively deprive all German Iorps of the calculation basis of the pension promises they implement. From discussions with partner organisations, we know that this also applies to other member states.

Moreover, we believe that it would significantly jeopardise the willingness of employers to grant future pension promises via Iorps. We believe that the current proposal to revise the IORP II Directive should be withdrawn.

We call for a new revision proposal, which is based on an impact assessment and adequately reflects the specific characteristics of occupational pension systems, ensures proportionate cost-benefit regulation for Iorps and serves the interests of occupational pension stakeholders.

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