Review of Pension Rights: EU Fails to Adequately Protect Citizens’ Retirement Funds

The European Union has fallen short in its efforts to promote the establishment of supplementary pensions for its citizens, according to a recent report from the European Court of Auditors, which oversees the EU’s financial activities.

The auditors highlight that the lack of support for supplementary pension schemes is particularly concerning given the aging population in Europe, which necessitates higher pension savings for individuals.

“In light of the demographic and fiscal challenges faced by EU economies, the role of supplementary pensions should be increasingly emphasized,” stated Mihails Kozlovs, the Court of Auditors member responsible for the report, during a press conference.

Supplementary pensions are additional retirement benefits that can be obtained alongside the standard state pension.

“Regrettably, both employer-funded pensions and EU-wide personal pension schemes have not met expectations, particularly in terms of cross-border functionality. Further actions are required to bolster these plans,” Kozlovs remarked.

The report notes that neither the European Commission nor the European Insurance and Occupational Pensions Authority (Eiopa) has made sufficient efforts to enhance the role of occupational pensions within member states.

Occupational pensions are not operating as intended across borders and are mainly prevalent in select countries, according to the Court’s findings.

The authorities have also struggled to promote the pan-European personal pension product (Pepp), which was established to facilitate the transfer of pensions for Europeans changing jobs within the EU. Launched in March 2022, Pepp has seen a disappointing uptake, with fewer than 5,000 savers participating—a figure deemed “extremely low” by the auditors.

Moreover, the Court of Auditors expresses concern over the lack of transparency surrounding pension savings for European citizens. Many individuals struggle to obtain a clear overview of their state, occupational, and personal pensions, complicating their ability to estimate future retirement income.

Additionally, there is insufficient transparency regarding the costs and returns associated with pension funds, an area where Eiopa should have taken more initiative to improve.