The Pan-European Personal Pension Product – PEPP – returns to the European agenda at a time when two realities are overlapping and simultaneously impacting the labor market: an aging population (with a direct effect on the sustainability of public pensions) and professional mobility – both internal and cross-border – which has already become the „new normal.” In short, demographic pressure and mobility meet precisely where systems are hardest to adapt. This is not a minor detail: by 2025, the number of immigrants in the EU reached a record level of 64.2 million.Migration and asylum in Europe – 2025 edition – Interactive publications – Eurostat), supporting Claudia Sofianu, Partner, Head of People Advisory Services, and Dan Răuț, Senior Manager, People Advisory Services, EY Romania, in a new analysis.
Currently, there is a form of „portability” at the EU level for Pillar I contributions and rights (public pension) through the coordination of social security systems rules. In contrast, for supplementary pensions and voluntary pension products, this portability is not yet consistently offered, and national differences remain a barrier.
”Almost three years since our first material Regarding PEPP, the conclusion remains, pragmatically, the same: success will not come from European architectural niceties, but from how the product is „anchored” in national policies. It's worth saying directly: without a credible fiscal anchor, interest remains rather theoretical. And especially through incentives that truly matter for long-term savings,” say the study's authors.
The problem is, in fact, structural. Without additional long-term savings, retirement incomes will shrink – and the discussion is no longer about „if,” but „how quickly.” The pressure is first seen where careers are fragmented or cross-border: portability and continuity of contributions remain difficult to manage, even when the intention exists.
Against this backdrop, the EU is accelerating supplementary pension reforms, and PEPP – a standardized, digital, and portable product – is undergoing a broad review. The stated goal is to bridge the gap between the initial ambition and the modest adoption so far. Why has it lagged behind? In practice, two brakes consistently reappear: limited supply (few providers and products actually available) and uneven tax incentives, which in many markets have made PEPP less competitive than local alternatives.
PEPP Review
In November 2025, the European Commission proposed amendments to the PEPP Regulation, with a goal that is simple to state (but difficult to achieve): a wider range of options and real benefits for savers. The package aims to provide more diverse investment options, more flexible risk management mechanisms, and a more attractive framework for providers. Taxation, however, remains a sensitive issue. Taxes fall under national jurisdiction, but the Commission insists on a basic principle: PEPPs should not be treated less favorably than comparable local products.
If there isn't a cohesive approach, the differences in incentives will continue to fragment the market – and the product will remain „fair” on paper and difficult to sell in practice. The „Savings and Investments Union” (SIU) initiative also fits into this logic: directing private savings towards investments and, in parallel, strengthening the pillars of retirement income beyond the public system.
ECOFIN and institutional positions
In the ECOFIN Council (in the first half of 2026), broad support emerged for the Commission's direction: richer offerings, portability, and simplification. But there is also a red line that states are repeating: taxation must be carefully calibrated. It is worth mentioning here too: no one wants an advantage granted to PEPP to distort competition with already-functioning national products.
The signals in 2025 were, essentially, convergent. The European Court of Auditors critically assessed the product's development and showed that PEPP had not achieved its objectives. And from the perspective of the European Insurance and Occupational Pensions Authority („EIOPA”), the conclusion is similar: without a more coherent internal market for supplementary pensions – applicable rules, better distribution, and real competition – PEPP risks remaining marginal.
Case Status (2025–2026)
On November 20, 2025, the European Commission published the package revising Regulation (EU) 2019/1238 on PEPPs (COM/2025/840). The approach is threefold: (i) a broader range of options (providers and products), (ii) greater appeal to contributors (options and risk), and (iii) true comparability with local products—including through clarifications regarding non-discriminatory tax treatment.
The link with SIU matters for a pragmatic reason: the EU seeks to shift some private savings towards productive investments and, in parallel, strengthen multi-pillar pension systems. In other words, the public pillar remains essential, but it cannot be the only one we rely on for predictable retirement income.
Policy directives
Beyond the legislative text, the question is simple: can PEPP become easy to understand, easy to compare, and easy to buy? If so, it has a chance to move from a „European project” to a used product. In short, its usefulness must be evident in the purchasing experience, not just in regulations. In operational terms, the directions currently discussed can be summarized as follows:
- Democratization of access – simple and transparent products, more efficient digital distribution, and more suppliers for real competition and better costs
- Flexibility and diversification – more investment options and risk mitigation mechanisms tailored to different investor profiles
- Integration into the SIU – PEPP as a supplement to pensions and as a tool for channeling savings to European capital markets
- Reducing tax frictions – promoting non-discriminatory treatment between PEPP and similar products, even if the final decision remains at the national level.
Implications for Romania
Romania has so far taken an essentially balanced stance: openness to the development of PEPP, but also attention to the risk that potential tax advantages might create asymmetries compared to national products. This is a legitimate public policy tension: you want to encourage long-term savings, but without distorting competition and without „penalizing” existing solutions.
PEPP could be especially relevant for highly mobile segments: IT specialists, freelancers with projects in multiple states, expats, or people who work abroad periodically. For them, contribution continuity and the transfer of rights remain complicated. A functional pan-European product would reduce administrative friction – and, implicitly, the uncertainty that discourages saving.
Adoption will not be automatic. For PEPP to become a viable option in Romania, there are several conditions that need to be clarified and, above all, made comparable to local products: tax treatment clear, predictable, and nondiscriminatory, Costs and value (competitive fees and easily comparable investments with pillars II and III), seamless portability (simple transfer, with transparent costs and times) and distribution and information (credible channel and comparable information so that the choice is made with full knowledge).
From this perspective, Law no. 227/2015 on the Tax Code, as amended by GEO no. 8/2026, introduces, starting March 1, 2026, the following rules for the Pan-European Personal Pension Product (PEPP):
- Pensions in the PEPP framework are categorized as non-taxable income, up to the equivalent in lei of 400 euros per year
- Contributions the PEPP are deductible (reduces the tax base), up to the equivalent in lei of 400 euros/year/person, for both authorized individuals/independent activities and employees. In the case of employees, the facility applies within the mentioned annual cap, whether borne by the employee or the employer, reflecting in the calculation of the taxable base for salary income, under the conditions of the Tax Code.
The conclusion is simple: PEPP can become a credible option for cross-border careers and for those who do not „fit” naturally into national products. But without comparable fiscal treatment and without distribution that makes it accessible, it will remain a fair product at the European architectural level and too irrelevant in actual saving decisions. In practice, this means the product must be competitive and easy to explain, not just well-intentioned. The next stage is inevitably operationalization.
In the coming months, negotiations between EU institutions and member states – particularly on the fiscal area and implementation details – will show whether the relaunch translates into a widely used product or remains a marginal one. Ultimately, the question is not whether PEPP will exist, but whether it will become relevant enough to change behaviors, not just tick a political box.