Getting Private Pensions Right

Connecting retirement security with Europe's investment ambitions

Europe faces two closely linked challenges: ensuring financial security in retirement and mobilising more private savings for long-term investment. While Europeans are generally good at saving, much of this money does not find its way into investments that could support economic growth.

At GDV's „Getting Private Pensions Right“ event in Brussels on 13 October, participants explored how supplementary pensions, and PEPP in particular, could help address these challenges.

The discussion highlighted that PEPP should be seen as part of the broader Savings and Investments Union (SIU), with the potential to create more opportunities for citizens to build additional retirement income while channelling savings into long-term investments.

Simplicity and financial literacy as foundations for success

A recurring theme was the need to make private pensions easier to understand and use. The limited success of the original PEPP framework has shown that even a promising European initiative will struggle if products are too complex or fail to meet consumers' expectations.

However, simplicity alone is not enough. Financial literacy was identified as essential to encouraging more Europeans to save and invest. Many people lack the knowledge needed to make informed investment decisions or fully understand their retirement income.

Participants stressed that improving financial literacy requires a collective effort involving policymakers, schools, and the financial services industry. This also means adapting to changing consumer behaviour, particularly among younger generations who increasingly rely on digital tools and artificial intelligence for financial information.

At the same time, professional advice remains important. Even simple products may not meet consumers' needs without appropriate guidance.

Providing choice for different retirement needs

Another central question was how PEPP can accommodate different attitudes towards risk. Not all consumers are comfortable with investment uncertainty, and pension products should reflect these differences rather than relying on a one-size-fits-all approach.

The discussion explored how a basic PEPP and more tailored solutions could offer different investment options while remaining understandable and accessible. Participants also emphasised that simplicity should be considered from the consumer's perspective. Savers need clarity on practical questions, including tax treatment, what happens when their circumstances change and what they can expect from their pension over time.

Insurers can contribute their experience in managing long-term investments and risks to provide solutions that reflect these different needs.

Creating the right conditions for PEPP to succeed

Beyond product design, the discussion focused on what would make private pensions genuinely attractive and accessible.

Tax treatment emerged as a particularly important factor. Appropriate fiscal incentives can encourage participation, but differences between national pension and tax systems remain a challenge. The audience discussion also highlighted the difficulties of promoting supplementary pensions when public budgets are under pressure.

Accessibility was another priority. While digital tools can help consumers research pension products, many still value personal advice when making long-term financial decisions. Offering different advice channels and improving access to pension tracking tools could help people better understand their retirement needs and plan accordingly.

PEPP could also provide new opportunities in Member States where supplementary pension systems are less developed, helping more citizens participate in long-term saving and investment.

From European ambition to practical success

The discussion made clear that making PEPP successful requires more than revising its regulatory framework. Simplicity, financial literacy, consumer choice and appropriate incentives all have an important role to play.

For consumers, the key is whether a product offers clear value, meets their individual needs and provides confidence about their financial future. For providers, the framework must allow the development of attractive long-term savings solutions while ensuring appropriate safeguards.

Ultimately, PEPP's success will depend on its ability to encourage more Europeans to save for retirement while contributing to Europe's broader investment ambitions. Turning this potential into reality means making private pensions understandable, accessible and worthwhile for the people they are intended to serve.