EIOPA proposes a broad reform of the PEPP to tackle Europe’s pension gap and support the digital and green transitions

The European Insurance and Occupational Pensions Authority (EIOPA) published today a Staff Paper on the future of the Pan-European Pension Product (PEPP). The paper sets out the reasons behind the limited uptake of the PEPP and suggests improvements to its design to overcome supply-side, demand-side and structural barriers hindering its broader adoption.

EU citizens collectively hold around €34 trillion in savings, yet around a third of these funds are held in bank deposits. At the same time, aging populations across the EU are increasing the strain on state pensions. With ever fewer workers supporting a growing number of retirees, Member States face the major challenge of continuing to provide adequate retirement income while maintaining robust public finances. 

The Pan-European Pension Product (PEPP), launched in 2022, was designed to offer a simple, transparent, cost-efficient and mobile retirement savings option with which European citizens could supplement their state pensions. A well-functioning PEPP market can help reduce Europe’s pension gaps, provide citizens with adequate and sustainable retirement income and supply vital capital to finance the long-term growth of the EU’s real economy, as well as the green and digital transitions.

Still, due to various supply-side, demand-related and structural reasons, its uptake has been limited, warranting re-assessment. In the Paper published today, EIOPA takes stock of why PEPP has not lived up to its potential and proposes enhancements that could breathe new life into supplementary pensions across the EU.