Better Finance has published its 12th annual pensions report flagging risks to the financial security of European pension savers. The report has highlighted sustained inflation, hidden fees, and inefficient asset allocation as key issues that could affect retirement savings, urging immediate regulatory action to protect savers’ purchasing power.
Following a tough 2022, 2023 saw a partial recovery, with all 43 pension products examined delivering positive nominal returns. However, the report found that these gains often fall short once inflation and fees are considered, especially for products with limited long-term growth. The report evaluated “real net returns”—returns adjusted for inflation and fees—to provide a realistic view of retirement outcomes for savers.
The report also identified key challenges in the European pension landscape. Many pension products follow overly conservative asset allocation strategies, underperforming compared to balanced benchmarks over ten years and limiting savers’ growth potential.
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The analysts spotted transparency issues around fees, with no public cost data available for one-third of the products examined, indicating that hidden fees continue to impact returns. Despite gains in 2023, many pension products still struggle to keep up with inflation, diminishing savers’ purchasing power as inflation rises across Europe.
The report also found variation in transparency across EU countries. While the Netherlands and Italy uphold high transparency standards, other countries, such as Germany and Bulgaria, lack sufficient data, hindering cross-border performance comparisons and underlining the need for unified EU data standards.
To tackle these issues, Better Finance has called on the European Commission to enhance transparency and consumer protection through the Retail Investment Strategy aimed at empowering retail investors with clear information, better advice, and stronger protections to fully benefit from the EU’s Capital Markets Union.. The recommendations include standardised disclosure of fees and performance, reform of advice models that favour high-fee products, and the introduction of an EU-wide “Ecolabel” to support sustainable investments. A Better Finance spokesperson said: “European savers need transparency in fees and performance data to secure adequate retirement returns. The Retail Investment Strategy’s reforms are a crucial step toward a fairer future for pension savers.”
