BETTER FINANCE publishes the 2025 edition of “Will You Afford to Retire?” revealing persistent structural challenges in long-term and pension savings across Europe. Despite a second strong year, European pension savers still struggle to preserve purchasing power.
BETTER FINANCE today released the latest edition of its flagship research, “Will You Afford to Retire? The Real Return of Long-Term and Pension Savings Products”, covering market developments and performance results up to and including 2024. This annual report assesses the real-world outcomes actually delivered to European pension savers, analysing 47 categories of supplementary pension and long-term savings products across 16 EU Member States, with up to 25 years of historical data.
A second strong year, but long-term real returns remain disappointing
For the second consecutive year, performance in 2024 was encouraging. The median nominal net return reached 8.1%, while receding inflation allowed the median real net return to rise to 4.8%. Returns, however, varied widely across Europe, ranging from over 25% in real terms for Sweden’s AP7 Såfa, the default option of the Premium Pension system, to a loss of purchasing power for Polish voluntary pension funds.
Despite this recent rebound, the long-term picture remains deeply concerning. Over a 10-year horizon, the median real net return is barely positive at 0.3%, and a significant number of product categories continue to deliver negative real outcomes, meaning savers have lost purchasing power over time. Two consecutive years of strong market performance have therefore not been sufficient to offset years of mediocre or poor long-term results.
Inflation: lower, but still eroding pension wealth
While inflation across the EU has fallen back towards more “normal” levels, the report stresses that even moderate inflation significantly erodes pension wealth over time. Long-term savings products must therefore deliver consistently positive real returns, a basic requirement that many supplementary pension schemes still fail to meet.
Benchmarking against the capital markets
To assess value for money, the report benchmarks pension product performance against a simple and conservative capital market portfolio composed of 50% European equities and 50% European bonds. Over a 25-year period, this benchmark generated a 187% nominal return, or 61.3% in real terms. The comparison highlights the persistent underperformance of many retail pension products, even relative to cautious market-based alternatives.
Structural performance gaps between pension pillars
The report confirms a structural divergence in outcomes between pension pillars. Over the past decade, occupational pensions (Pillar II) have delivered higher real net returns than personal voluntary pensions (Pillar III). This gap largely reflects persistently higher costs in Pillar III products, which on average have been 1.1 percentage points more expensive than occupational schemes over the long run, despite some recent cost reductions.
A call for urgent policy action
Commenting on the publication, Aleksandra Mączyńska, Managing Director of BETTER FINANCE, said: “Two good years do not compensate for decades of weak real returns. Too many European pension savers are still failing to preserve their purchasing power over the long term. If Europe wants citizens to trust supplementary pensions, long-term performance, cost-efficiency, and transparency, must improve decisively.”
Policy recommendations
Against the backdrop of the European Commission’s renewed focus on savings, investments and supplementary pensions, BETTER FINANCE calls for concrete regulatory action to improve outcomes for savers. Key priorities include simplifying and strengthening disclosure rules under the PRIIPs framework, embedding robust value-for-money supervision that compares performance to inflation and capital market benchmarks, and improving access to pension tracking tools that allow citizens to see the costs, risks and performance of all their pension rights in one place. BETTER FINANCE also supports measures to lower costs and simplify product design, notably for the Basic PEPP, and urges policymakers to ensure that any expansion of auto-enrolment schemes is limited to cost-efficient, high-performing occupational pensions, with adequate safeguards and redress mechanisms for savers.