Europe’s pensions supervisor is relaunching the failed Pan-European Personal Pension Product under a new label, EuroPension. EIOPA hopes that clearer branding and streamlined rules will finally attract savers and providers. Yet critics warn the project risks repeating past mistakes: too complex to compete with low-cost ETFs, too weak to rival national schemes, and too focused on capital markets at the expense of statutory pensions.
EIOPA announced the plan last week in its technical input to the European Commission. It follows the disappointing uptake of PEPP since its 2022 launch. By late 2024, only a handful of providers had registered, managing just twelve million euros — far short of EU ambitions. EIOPA concluded that PEPP failed because of rigid design features, a lack of tax incentives, and limited consumer awareness.
Europe’s pension systems rest on three pillars. Pillar I consists of statutory state pensions, financed on a pay-as-you-go basis and the foundation of retirement security. Pillar II covers occupational pensions through employers, often collectively negotiated and mandatory in some countries. Pillar III refers to voluntary personal pensions with banks, insurers or assetmanagers. PEPP — and now EuroPension — belongs in Pillar III, though EIOPA’s plan would also allow it to function as a workplace pension, edging into Pillar II.
Recognisable EU label
At the heart of the proposal is a recognisable EU label. Only products meeting strict criteria on simplicity, transparency and consumer protection would qualify as EuroPension. Other, more flexible offerings would continue under the PEPP framework without the label.
European pension “savers should be able to easily compare all their retirement savings options, including their benefits and drawbacks, so that they can reflect national requirements under the PEPP regime,” Henning Schwabe, partner at Arendt & Medernach, told Investment Officer.
EIOPA suggests replacing the rigid one percent annual fee cap with a value-for-money regime, adopting lifecycle strategies as the default investment approach, and scrapping the requirement to maintain multiple sub-accounts across member states. Employers could also use EuroPension as a workplace pension, including auto-enrolment.
Fund industry scepticism
Not everyone is convinced. “An enormous disappointment,” said Sebastiaan Hooghiemstra, fund lawyer at Loyens & Loeff in Luxembourg. “EuroPension cannot compete on the open market with low-cost ETFs or straightforward savings wrappers.”
Hooghiemstra was involved in the drafting of the PEPP regulation in its early stage, leading up to the launch of the first generation of Pepp products in 2022.
He points to U.S. retirement accounts as a more attractive model. “As a citizen I fail to understand why we could not offer a similar product in Europe,” he told Investment Officer.
In the U.S., 401(k) plans let workers invest directly in equities, ETFs or bonds, with taxation deferred until payout. Roth IRAs, by contrast, are taxed upfront but withdrawals at retirement are tax-free. “Integrating a EuroPension into the second pillar will slow down the entire process,” Hooghiemstra added. “It would be better to first experiment in the voluntary domain and then improve it. You need to gain experience first. It is already too complicated.”
Pillar I first
Civil society voices echo the scepticism, albeit from a different angle. “Improving supplementary pensions can play a role, but any reforms must start from the principle that Pillar I remains the foundation of retirement security in Europe,” said Julia Symon, head of research and advocacy at Finance Watch. She warned that the political drive to mobilise retail savings into capital markets risks overlooking affordability, value for money and fiduciary duty.
Simplify or fail
Better Finance, which defends the interests of investors and financial services users in Europe, also welcomed the clearer EuroPension label but called the product far too complex. “Only drastic simplification will make it affordable for providers to implement, sold without mandatory advice, and truly accessible to savers,” a spokesman said.
The group stressed that EuroPension should be compared with national pension products, not with ETFs or UCITS, and argued that real progress depends on member states extending proper tax treatment.
Missing tax link
Here too, Hooghiemstra sees an Achilles heel. “In 2017, EU member states agreed to extend their national tax benefits for retirement savings to PEPP products, but many did not follow through,” he said.
The Dutch pensions industry at the time lobbied hard in The Hague and Brussels to preserve the domestic model. This meant existing tax benefits for retirement savings were never applied to PEPP products, making a cross-border pension product unattractive for Dutch savers.
Passporting challenges
One of the sticking points in the original PEPP design was the requirement for providers to offer sub-accounts in every member state where they wanted to operate. This was meant to guarantee portability but became a barrier, adding cost and administrative burden. In its review, EIOPA proposes scrapping this rule and clarifying that savers can subscribe to any EuroPension across the EU, regardless of their residence. That change would restore the product’s passporting logic, making it function more like UCITS or ELTIFs: a single registration allowing cross-border distribution, rather than a patchwork of national compartments.
Luxembourg opportunity
For Luxembourg, a jurisdiction built on cross-border fund distribution, this European pension debate is more than academic. As reported earlier by Investment Officer, industry representatives and policymakers in Luxembourg see a passportable pensions product as a natural extension of the country’s role as a European financial product manufacturer and distribution hub.
Research by the Luxembourg Institute of Socio-Economic Research has suggested latent demand for a truly portable European pension. Workers in the Grand Région (Luxembourg, France, Germany and Belgium) were willing to sacrifice up to 3.6 percent of their investments to keep the same policy after moving to other EU countries.