Turning regulation into opportunity: how fund managers can thrive under the SIU framework

The final quarter of 2025 has been marked by a series of pivotal initiatives from the European Commission, signaling a decisive push to reshape the EU’s financial landscape. These proposals aim to strengthen competitiveness, simplify regulatory frameworks, and align the sector with both sustainability and technological imperatives. Luxembourg stands at the crossroads of these regulatory changes set to shape the industry in 2026 and beyond.

What are the key proposals? 

As part of the Savings and Investment Union (SIU) strategy, the European Commission has introduced a series of reforms designed to strengthen the EU’s financial architecture, increase retail participation in financial markets, enhance investor confidence, and foster deeper market integration. The key areas covered by reforms so far include: 

• PEPP: Boosting retail participation through simplified processes, clearer product rules, and improved transparency 
• IORP: Strengthening occupational pension frameworks to ensure long-term stability and cross-border flexibility 
• Market integration: Promoting a unified EU capital market, paving the way for greater harmonization and efficiency across Member States 

1. PEPP: Boosting retail participation 

The recent review of the Pan-European Personal Pension Product (PEPP) proposes targeted reforms to encourage broader adoption and increased effectiveness across the EU. For Luxembourg’s financial ecosystem, these changes have the potential to further diversify retirement savings options and reinforce the country’s role as a center for cross-border pension solutions. Key proposals include: 

• Simplification of account management for PEPP providers to reduce operational complexity 
• Clearer distinction between basic and tailored PEPP products 
• Encourage Member States to ensure comparable tax treatment between PEPPs and national personal pension products 
• Review of the product oversight and governance to incorporate value-for-money considerations 
• Expansion of the EIOPA central public register to include historical data on costs, performance and risk indicators 
• Target amendments to KID to improve comparability and transparency 
• New rules for the provision of advice supporting more consistent retail investor protection 
• Enhance the PEPP Benefit Statement by including cost information 

2. IORP: Strengthening occupational pension frameworks for long-term stability 

The review of the Institution for Occupational Retirement Provision Directive (IORP II) aims to strengthen and modernize the regulation of occupational pension regulation across the EU. For Luxembourg, these reforms could enhance the flexibility and cross-border appeal of pension offerings and reinforce the country’s role as a provider of panEuropean solutions. by, inter alia: 

• Allowing IORPs to operate multiple pension schemes, increasing efficiency and scalability 
• Streamlining cross-border procedures for IORPs by introducing clearer timelines, improved coordination between competent authorities, and a simplified notification process for extending activities within the same host Member State 
• Simplifying rules for pension schemes transfers, reducing barriers to consolidation and scale while ensuring adequate protection of members and beneficiaries 
• Ensuring that IORPs establish a written policy for own-risk assessment, strengthening governance and risk management 

3. Market integration: Towards a unified EU capital market 

On 4 December 2025, the EU Commission unveiled a comprehensive package as part of the Savings and Investment Union Strategy (SIU) aimed at further integrating and harmonizing capital markets across the EU. For Luxembourg, these proposals could bring significant opportunities and adjustments, being a leading hub for investment funds and cross-border finance.

Translating regulatory changes into opportunities

These proposals present significant opportunities for fund managers, particularly through the expansion of their retail investor base and the streamlining of cross-border requirements. For instance, by simplifying account management for PEPP providers and introducing clearer rules for both basic and tailored PEPP products, these changes may make personal pension solutions more accessible and attractive to individuals across the EU. For fund managers, this translates into a broader pool of potential investors, enabling them to design innovative and cost-efficient products that cater to diverse retail needs.

In terms of cross-border operations, the harmonization of rules throughout Member States may reduce administrative burdens and operational costs for fund managers. Moreover, these reforms promote greater agility, allowing fund managers to scale their offerings across multiple jurisdictions more efficiently.

The PEPP is a particularly important piece in the Capital Markets Union puzzle. The much-lauded Draghi report also highlights that EU capital markets are undersupplied with long-term capital, largely due to the underdevelopment of pension funds in continental Europe compared to other major economies. For example, in 2022, the pension assets in the EU represented 32% of GDP, while in the US total pension assets amounted to 142% of GDP; in the UK, they were close to 100% of GDP.

Going forward, the development of second-pillar pension schemes is likely to be a priority policy area for both the EU and its Member States. Considering that the overarching goal of the SIU is to encourage retail investors to put their savings to work through novel investment products, the broader macro-institutional environment will be supportive for both emerging and established fund managers seeking to develop new products and capture future fund flows.

Preparing to thrive with SIU

As mentioned earlier, SIU aims to create new pathways for growth and innovation in Europe. They are not mere regulatory reforms; they represent a strategic opportunity for fund managers to broaden their investor reach, scale cross-border operations, and strengthen their market positioning. To thrive in this evolving scenario, fund managers should stay informed and be proactive:

Key recommendations for fund managers:

1. Assess and conduct country-level studies to better understand and compare pension plans across EU Member States: This will support more informed strategic decisions and refined product positioning.
2. Develop retail-focused products: Assess the possibility of leveraging the simplified PEPP framework to design innovative, cost-efficient pension products tailored to retail investors. In this context, consider adding features such as flexible contribution options and transparent cost structures to build trust and attract a broader investor base.
3. Optimize cross-border distribution strategies: Prepare to take advantage of harmonized rules and streamlined procedures to expand operations across multiple EU jurisdictions. Review your current distribution network and identify markets where reduced administrative barriers can accelerate growth.
4. Invest in digital platforms: Enhance digital onboarding and account management capabilities to meet the SIU’s emphasis on simplicity and transparency. Digital tools can improve customer experience, reduce operational costs, and support scalability across borders.
5. Strengthen governance and compliance frameworks: Prepare for enhanced oversight requirements by updating risk assessment policies and governance structures. Incorporate value-for-money principles and ensure compliance with new disclosure standards, such as cost information in benefit statements.
6. Engage proactively with regulators and industry bodies: Stay ahead of regulatory developments by maintaining active dialogue in industry forums, working groups and with service providers which can provide early insights into implementation timelines and best practices, positioning your firm as a leader in adapting to change.

Looking forward 

Those proposals are now in the legislative process, being discussed by the Council and European Parliament before entering the trialogue phase. Therefore, their content remains subject to change. Other proposals, such as EuVECA review, are still to come.

For Luxembourg, the coming months will be crucial in assessing the practical implications of these reforms. Local institutions, market participants, and policymakers should closely monitor developments and actively engage in consultations to ensure that Luxembourg’s interests and expertise are reflected in the evolving regulatory landscape. Staying informed and proactive will be key to leveraging new opportunities and navigating potential challenges as the EU’s financial framework continues to evolve. The devil being always in the details of the application of those proposals, their unexpected impacts on the day-to-day business of the European Fund managers have to be considered carefully, with real engagement and open discussions between the European authorities and the representatives of the financial markets.