European pension and long-term savings products experienced significantly poor performance in 2022, according to the Better Finance pensions report on 30 November 2023. The Brussels-based advocacy group attributed the poor performance to declining capital markets and escalating inflation in 2022, exacerbated by geopolitical conflicts, notably Russia’s war in Ukraine.

Covering 17 EU member states, excluding Luxembourg, the report labelled 2022 as an ‘annus horribilis’ for pension and long-term savers. It underscored the problem of nominal returns failing to keep up with inflation, resulting in significant losses in purchasing power for many European savers and investors.

Key factors in reducing net returns, as identified in the report, include a heavy investment in bonds with negative yields and the burden of high fees. Moreover, the report criticised the opacity of charges, which complicates the comparison of pension providers and products for savers.

Recommendations

Better Finance called for urgent action from EU and national authorities. This includes implementing proposed regulations on product oversight, governance and investor information. The report also pointed out the challenges in accessing essential data. Recommendations for policy changes focus on enhancing reporting frameworks and standardising reporting requirements, as well as addressing major concerns for EU pension savers. These concerns range from improving supervisory reporting and statistics, standardising rules to manage conflicts of interest, and providing clear, comparable information to investors.

Additionally, the not-for-profit organisation emphasised the need to clarify the sustainability of savings, advocate for diversified asset allocation, propose fair taxation policies and support the introduction of automatic enrolment in occupational pensions.