Closing the gap: can auto-enrolment solve Europe’s pension adequacy problem?

Europe is facing a pension adequacy problem. In 2022 the EU old-age dependency ratio was 36%, meaning roughly 2.7 workers supported each person aged 65 or over. This ratio is projected to rise to 55% by 2050, and 65% by 2100, meaning there will be fewer than 1.5 workers for every retiree.[1] Driven by low birth rates and high retirement rates, these developments put a heavy strain on public pension systems, a problem that is further exacerbated by the low rate of supplementary pensions in much of the EU. However, Europeans do not have a savings problem. €10 trillion is sitting in low-yielding bank accounts. In order to bridge the gap between savings and pension adequacy, the European Commission has now incorporated pensions in its flagship initiative, the Savings and Investment Union.

In November 2025, the Commission put forward a set of measures to close the pension adequacy gap.[2] Among these, auto-enrolment promises to have the most immediate impact on coverage. It makes supplementary pension participation the default, automatically enrolling workers, who must then actively opt out. The behavioural logic is well-established. It dramatically expands coverage without compulsion. However, industry representatives also stress that “the effectiveness of each feature depends heavily on the specific characteristics of national pension systems, labour markets, and institutional settings.”[3] While policymakers like to stress that “Auto-enrolment has proven successful in increasing participation in pension saving in countries where it has been implemented,”[4] past experiences in Europe and beyond are somewhat mixed, and the lessons of earlier schemes are impossible to ignore.[5]

The United Kingdom stands as the clearest success story. Auto-enrolment was phased in between 2012 and 2018 and private sector pension participation rose from 42% in 2011 to 86% by 2022, with an opt-out rate of only 10%. By 2023, more than 22 million people were saving in a workplace pension scheme: over 10 million more than in 2012.[6] However, auto-enrolment is not a plug-and-play solution. The recent 2019 scheme in Poland did not meet expectations because at about the same time pension reforms redirected private savings to the state, weakening public trust in the process. In Turkey, affordability concerns led to high opt-out rates in a new scheme introduced in 2017, showing the importance of calibrating contribution rates to household cash flows. In Italy, reforms in the early 2000s revealed a long-standing reliance on the public pension system, which has suppressed engagement with supplementary schemes. This is a cultural and structural barrier that cannot be overcome by communication campaigns alone.[7]

The Commission has explicitly incorporated several of these hard-won lessons in its recommendations, emphasising stakeholder consultation, phased contribution rates, communication campaigns and careful integration in existing schemes. The result is a meaningful reference framework against which Member States can assess their own shortcomings, and the measured response from industry suggests that the approach has largely been accepted.[8] However, pension system design is a matter of national competence under EU law, and a recommendation is only as effective as the political will behind it. The coverage gap will not close by itself.

This is the second in a series of blogposts on the SIU as part of the new SIU lab.

References:

[1] Bruegel, “Beyond retirement: a closer look at the very old,” April 2024, https://www.bruegel.org/analysis/beyond-retirement-closer-look-very-old

[2] Commission Recommendation C/2025/9300, ELI, http://data.europa.eu/eli/reco/2025/2384/oj

[3] Insurance Europe response to European Commission targeted consultation on supplementary pensions, page 7, https://www.insuranceeurope.eu/news/3416/insurance-europe-publishes-response-to-ec-consultation-on-supplementary-pensions

[4] Commission Recommendation C/2025/9300, ELI, http://data.europa.eu/eli/reco/2025/2384/oj, p. 4.

[5] LE Europe, Best practices and performance of auto-enrolment mechanisms for pension savings, 2021, https://le-europe.eu/publication/best-practices-and-performance-of-auto-enrolment-mechanisms-for-pension-savings-december-2021/

[6] DWP, Workplace Pension Participation and Savings Trends of Eligible Employees: 2009 to 2022, November 2023, https://www.gov.uk/government/statistics/workplace-pension-participation-and-savings-trends-2009-to-2022/workplace-pension-participation-and-savings-trends-of-eligible-employees-2009-to-2022; Pensions Policy Institute, Automatic Enrolment Contributions Briefing Paper, June 2024, https://www.pensionspolicyinstitute.org.uk/media/mwal1sfp/20240620-ae-contributions-briefing-paper-final.pdf

[7] LE Europe, Best practices and performance of auto-enrolment mechanisms for pension savings, 2021, https://le-europe.eu/publication/best-practices-and-performance-of-auto-enrolment-mechanisms-for-pension-savings-december-2021/

[8] PensionsEurope Position Paper on the Non-Legislative Part: Pension Package of Supplementary Pensions, April 2026, https://pensionseurope.eu/pensionseuropes-position-paper-on-the-non-legislative-part-of-the-pension-package/