Under the proposed Savings and Investment Union (SIU), the European Commission aims to redirect a portion of the bloc’s trillions in bank deposits towards capital markets and productive long-term investments. As such, European citizens would secure their long-term financial well-being, while European firms would get access to new sources of financing. After all, the Draghi Report estimates that an additional €750–800 billion is needed annually by 2030 to maintain competitiveness.
Yet, European households are cautious amidst fragmented capital markets. The SIU attempts to bridge such constraints through the Commission’s recommendation for auto-enrolment, the relaunch of the Pan-European Personal Pension Product (PEPP), and the broadening of PEPP to Pillar 2 workplace pensions in addition to the Pillar 3 individual pensions.
The success of the SIU will hinge on whether a truly integrated long‑term savings market can be unlocked and how asset managers and Institutions for Occupational Retirement Provision (IORPs) respond.
Pillar 2 and IORPs take centre stage
The Commission’s aims to give IORPs greater flexibility, including expanded access to alternative assets, while maintaining prudential safeguards. The objective is to improve long-term returns, diversify portfolios, and strengthen the capacity of occupational pensions to absorb steady capital flows over decades.
But regulation alone will not shift household behaviour. This is why auto‑enrolment in Pillar 2 scheme has emerged as a cornerstone of the EU’s strategy to broaden pension participation and mobilise long‑term capital. Evidence from the Netherlands, where the vast majority of the private sector workforce is enrolled in Pillar 2 schemes, is instructive: As of 2023, Dutch IORPs hold assets exceeding €1.5 trillion, with a 22% average allocation to alternatives. The SIU would aim to replicate the Dutch model of diversified, long-horizon investment across the EU.
A new horizon for Pillar 3?
In parallel, the proposed reform of the PEPP marks another pillar of the SIU’s agenda. Since its 2022 launch, uptake has been constrained by a 1% fee cap, complex sub-account rules, and patchy tax treatment across Member States.
The Commission aims to address these frictions by introducing an affordable “Basic PEPP” invested in simple assets and offered without advice, alongside “tailored” PEPPs with guarantees or more complex investments requiring guidance.
It will also be open to workplace use and could serve as an auto-enrolment vehicle, where national law permits, broadening distribution barriers and ensuring comparable tax treatment across member states. As such, the PEPP has the potential to be a strong Pillar 3 option for all Europeans.
Luxembourg at the heart of the SIU
With its deep experience in cross-border fund structuring, the Grand Duchy offers the regulatory certainty and operational infrastructure required for scalable, multi-country pension solutions.
As regulatory reform reshapes both occupational and personal retirement frameworks, implementation will determine success. Luxembourg’s established ecosystem, combining supervisory credibility, technical expertise, and cross-border execution, places it at the centre of Europe’s evolving pension landscape.
If Europe succeeds in mobilising household savings more effectively, the Grand Duchy should not merely host that transformation; it is positioned to help drive it.
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