European Commission proposes to boost supplementary pensions and simplify sustainable finance disclosures

The European Commission published a package of proposals to strengthen supplementary pensions across the EU and to amend the EU’s sustainable financial disclosure framework to make it simpler and more aligned with market practice. The pension measures are intended to complement national public pension systems and sit within the Commission’s savings and investments union strategy. On supplementary pensions, the package recommends that member states further develop comprehensive pension tracking systems to give citizens a clearer view of accrued rights and expected benefits. It also proposes to strengthen and modernise the Institutions for Occupational Retirement Provision (IORP) II Directive, revise the Pan-European Personal Pension Product (PEPP) to remove requirements and design features that have limited uptake, and clarify the ‘prudent person’ principle for IORPs and PEPP providers to support increased investment in equity, including private and listed markets. On sustainable financial disclosures, the Commission proposes to narrow and streamline requirements by limiting entity-level impact disclosures to the largest financial market participants and substantially reducing product-level disclosures to data that is available, comparable and meaningful. The amendments would also introduce a categorisation system for products making environmental, social and governance (ESG) claims, with three broad categories (‘Sustainable’, ‘Transition’ and ‘Environmental, social, governance basics’), and reserve ESG claims in product names and marketing materials for categorised products. The proposed amendments to the IORP II Directive, the PEPP Regulation and the sustainable financial disclosure rules will be negotiated by the European Parliament and the Council.