The European Commission is returning mandatory contributions to professional pension funds: Europeans must “invest in their future pension”

European Commission presented a new package of measures that returns compulsory professional insurance in the second pension pillar and actually encourages citizens “invest to get big pensions”.

This approach was once used in the eurozone countries, but was frozen after the first Greek memorandum. Now he is returning – largely under pressure of the demographic crisiswhich is rapidly overloading state pension systems.

In Brussels, the idea is increasingly heard that the giant pension savings of states EU must work more actively. There are concerns that part of these funds may be used to finance the Union’s foreign policy initiatives. As a reminder, the recent proposal of the European Commission to Norway use the income of its state fund to buy weapons for Ukraine. In Greece, such statements are of particular concern: the experience of “haircutting” funds in 2012 is still fresh.

New rules: three key areas

The reform package is in line with the strategy Savings and Investment Union (SIU)aimed at enabling EU households to build long-term capital through financial markets. Measures include:

1. Automatic inclusion of workers in professional funds. The employee will be automatically enrolled in the fund, but will be able to opt out. The European Commission expects that this will increase citizen participation and form a significant “second pillar” of the pension system.

2. Expansion of the pan-European “pension tracker”. The tool will allow citizens to see all their pension rights in one window. The goal is to increase awareness and participation, since low participation is often due to a lack of information.

3. National pension indicators. EU countries will be required to regularly assess the sustainability, adequacy and effectiveness of their pension systems, including the second and third pillars of insurance.

Why is this happening now

The main factor is the rapid aging of Europe. According to the Commission, by 2070 every third European will be over 65 years old. This means growing pressure on government budgets, health care and pension funds. Already in many countries, the basic state pension does not provide the same standard of living, and women are especially vulnerable: the pension gap between men and women reaches 24.5%.

Brussels is increasingly saying that strong occupational pension funds can not only protect citizens, but also strengthen the EU economy – turning savings into long-term investments.

Greek situation: systemic stagnation

Greece is among the countries with the lowest level of participation V professional pension funds throughout Europe. Of the 29 existing voluntary insurance funds, only one was created in 2024. A total of 222,671 people are insured by TEM, which is only 4.85% of the economically active population.

Greek funds assets total 1.1% of GDPwhile in Denmark – 204%, in Switzerland – 164.8%, in Canada – 157.6%. Despite asset growth of 440% since 2012, the structure of the system remains weak and fragmented, with many funds too small to effectively diversify investments.

After the law was passed “Georgiadis – Tsakloglu” in 2023, the development of the second pension level is almost stopped. A consultation process is currently underway between EΛETΕΑ, Bank of Greece And Ministry of Labor to modernize the system.

The European Commission believes that Greece needs to expand the powers of the funds, improve supervision and simplify access for workers. But for a country that suffered a severe asset squeeze in 2012, any decisions related to managing pension money remain sensitive.

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