The unfair treatment, or complete financial exclusion, of certain consumers often stems from pension schemes not considering diverse consumer characteristics in the design or distribution of the scheme, the European Insurance and Occupational Pensions Authority (EIOPA), has said.

In its Consumer Trends Report 2023, EIOPA noted that beyond the impact of inflation, its work also highlights how some consumers may not be sufficiently and adequately served, or fairly treated, because of their non-dominant traits and characteristics, or because they be a vulnerable consumer.

EIOPA’s Eurobarometer 2023 survey revealed a persistent gender gap in insurance and pension access, leading female EU consumers being 10 percentage points less financially confident about retirement than men.

“Consumers who identify as belonging to minority groups not only have lower access to insurance and pension products/services but there is also a non-negligible amount of EU consumers who believe they are not treated fairly because of their non-dominant personal traits and characteristics,” the report noted.

Furthermore, EIOPA has found that some consumers may be more prone to fall into conditions of vulnerability, which in turn can lead to unfair treatment if adequate measures are not put in place.

For instance, younger consumers may face higher risks due to unfamiliarity with formal financial services, while older consumers might struggle with digital literacy.

EIOPA noted, however, that improved transparency and disclosure, as well as financial literacy initiatives across member states are enhancing pension awareness. Despite this, many EU consumers are concerned about their ability to retire comfortably.

EIOPA’s 2023 Eurobarometer survey shows that only 42 per cent of EU consumers feel they will have enough money for a comfortable retirement. Further research points to why this may be the case as only 23 per cent are enrolled in pension schemes, and 19 per cent have a personal pension.

“For greater financial confidence in retirement, transparency and clear information are essential as they promote understanding and enables informed decisions regarding savings and pensions. However, while national competent authorities (NCAs) have observed important improvements and the number of complaints relating to disclosure and transparency decreased, issues remain. In fact, NCAs continue reporting concerns with pension disclosures relating to the usage of technical jargon or misleading details,” EIOPA’s report stated.

EIOPA chair, Petra Hielkema, said that although pension providers in the EU are making efforts to ensure fair treatment of consumers, “more needs to be done to secure equitable outcomes for all”.

“The supervisory community in Europe must also do its utmost to prevent the handful of problematic products we have identified from eroding people’s trust in the insurance and pensions sectors, which provide vital financial services to consumers and businesses.”

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