Invest Europe welcomes positive changes in the supplementary pensions package and SFDR

Invest Europe, the association representing Europe’s private equity, venture capital, and infrastructure fund managers as well as their investors, welcomes the proposed reforms to the pensions framework, highlighting their potential to boost long-term investments across the EU.

In parallel, Invest Europe supports the European Commission’s ongoing efforts to simplify and streamline transparency rules for sustainable financial products through a review of the Sustainable Finance Disclosure Regulation (SFDR).

Pension reform - Key improvements welcomed by Invest Europe:

• IORPs are no longer discouraged from investing in private assets. The Commission’s proposal moves away from an approach that largely disincentivised investments in private markets, as the guidance on the implementation of the prudent person principle makes it clear that private equity, venture capital and infrastructure funds should be part of a well-diversified long term investment strategy.

• A new and improved PEPP: Invest Europe strongly supports the expected removal of the mandatory 1% fee cap on the Basic PEPP and the ability of PEPP to invest in unlisted assets to fully leverage the benefits of long-term illiquid investments essential for boosting pension returns.

  • However, the 5% cap on unlisted assets is overly restrictive.

While the proposed framework holds significant potential for unlocking pensions’ ability to invest in private equity and venture capital, the reforms’ ultimate success will require ambition from the co-legislators to transform the proposal into concrete improvements.

SFDR review - Key improvements welcomed by Invest Europe:

• A considerable reduction in disclosure requirements, in particular at entity and product level.

• An optional exemption for products of the closed-ended type created before the entry into application of SFDR 2.0.

• The ban on national gold-plating.

However, uncertainties remain, one being on the very criteria underpinning the revised categorisation system. To avoid unintended outcomes further work will be needed in the coming negotiations to address the specificities of the value creation-based business model and investment strategies adopted by PE/VC.

We look forward to working closely with policymakers to achieve a practical, effective outcome that unlocks the full potential of private capital for Europe’s retirement and sustainability future.