The European Insurance and Occupational Pensions Authority (EIOPA) is in “no position to ensure consistent supervisory practices across the EU” due to the “low uptake of its initiatives by national authorities and the minimum harmonisation framework” that it operates, according to a report by the European Court of Auditors (ECA).

Its special report, Developing supplementary pensions in the EU, also found that the European Union has, so far, been “unsuccessful” at boosting supplementary pensions to ensure adequate retirement income.

Despite several European Commission initiatives, neither cross-border occupational pensions nor pan-European pension products play a significant role in the EU’s supplementary pensions market.

Its report specifically singled out the EC and EIOPA, as it said the two institutions have “not managed to strengthen the role of occupational, employment-based pensions in EU countries, or get the personal pan-European pension product (PEPP) off the ground”.

While the report found that IORPs are estimated to have around €2.8trn in assets under management, serving 47 million workers and pensioners, it found their cross-border activities remain concentrated in the small number of countries where employer-sponsored pensions were already traditionally rooted.

This is mostly due to factors beyond the EU’s remit, the ECA said, but it highlighted that the EU has imposed extra requirements for cross-border funds, which puts them at a further disadvantage.

The report comes at a time when the EC, under its plans for the Savings and Investments Union (SIU), intends to revisit the legal frameworks for occupational pension funds and the pan-European personal pension (PEPP) product, with the aim of increasing their uptake and effectiveness.

Pension schemes play an important role in social protection and strengthening the EU’s capital markets, the ECA said. Although EU countries themselves are responsible for pensions, the EU has regulatory powers regarding cross-border mobility, consumer protection and the internal market.

Commenting, ECA member in charge of the report, Mihails Kozlovs, said: “In EU economies faced with demographic and fiscal challenges, supplementary pensions should become increasingly important.

“Unfortunately, neither employer-sponsored pensions nor the EU-wide personal pension have lived up to expectations, especially when it comes to cross-border operation. Extra steps must be taken to strengthen them.”

For example, the PEPP, which has been in effect since March 2022, was developed as an alternative for workers saving for retirement in the form of a portable cross-border product. However, a lack of tax incentives and a regulatory 1 per cent cap on costs and fees have reduced its attractiveness, the report found.

In 2025, there are only two PEPP providers in the market, with the second only very recently launched. Uptake has been extremely low so far, the ECA said, with fewer than 5,000 savers and less than €12m in assets under management.

Furthermore, the ECA said that the EU’s plans to improve transparency under the former Capital Markets Union, now the SIU, have “borne little fruit”. It therefore recommended providing an overview of state, occupational and personal pensions, which would help individuals understand their total future retirement income.

While it acknowledged that EIOPA has initiated measures to improve information about occupational pension schemes, it found that contributors and beneficiaries do not have full transparency regarding the performance of the underlying funds, including the costs to workers and the returns for retirees.

It said this element was “crucial” as many pension funds depend on investment performance, which is why occupational pension funds must also be supervised effectively.

In response, an EIOPA spokesperson said: "EIOPA welcomes the findings of the ECA and supports the recommendations outlined in the report. We agree that further efforts are needed to deepen the internal market for occupational pensions, offer viable, modern, and attractive personal savings solutions to EU citizens, and provide savers with a clearer overview of their expected retirement income across all three pillars.

"EIOPA remains committed to helping close the continent’s pension gap by effectively supervising occupational pension funds, promoting the creation of simple and portable savings products that offer good value for money, and enhancing pension transparency. However, it is important to note that current legal frameworks and EIOPA’s limited mandate have slowed down our ability to drive meaningful change in this area."

In addition, an EC spokesperson said the Commission “takes note of the special report from the ECA”, particularly its assessment that “further efforts are needed to strengthen the role of supplementary pensions in the EU and support the development of PEPPs”.

“The SIU recognises that stronger and more vibrant supplementary pension systems help people better save for their retirement and, by increasing the size of EU capital markets, they can also have positive effects on the financing of the EU economy. At the same time, the SIU communication acknowledges that the current legal frameworks for providing supplementary pensions via so-called IORPs and through the PEPP have not been very effective.

“Enhancing supplementary pensions requires further policy action at both national and EU levels. Pension policies is an area where the EU competence is limited, and member states have a crucial role to play in developing their supplementary pensions.

“At EU level, the Commission will soon review the regulatory frameworks for IORPs and PEPP to improve their effectiveness and attractiveness. Another key element of our strategy is promoting auto-enrolment in supplementary pensions, which can be effective in increasing participation in such schemes and enhancing returns of pension-holders.”

The spokesperson added that the EC will also promote the use and best practice of pension dashboards, which will provide member states with a “better view of the sustainability and adequacy of their pension system”, as well as of pension tracking systems which “allow citizens to get an overview of their future retirement income”.

As previously announced, the EC will issue recommendations by Q4 2025 on auto-enrolment in occupational pension systems, pensions tracking systems and pension dashboards.

“Some recommendations made by the ECA will inform and be addressed through those actions on supplementary pensions set out in the SIU communication. The Commission will continue to work closely with member states, the European Parliament, EIOPA, social partners and other relevant stakeholders to advance these initiatives,” the EC spokesperson concluded.

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