Brussels, 12 December 2024 – The European Union’s newly appointed finance chief, Maria Luís Albuquerque, has a unique opportunity to reshape how citizens engage with personal savings, potentially leading to significant economic benefits for households and member states alike. As Commissioner for Financial Services, the Savings and Investment Union, Albuquerque’s challenge is to shift Europe’s entrenched savings culture toward more productive and diversified investments, such as equities and stocks.
Currently, over a third of the EU’s total household wealth is sitting idle in bank deposits, compared to just 10% in the United States. Redirecting even a portion of this vast savings pool into market-based investments could have far-reaching consequences, from stimulating business creation and homeownership to reducing the burden on state budgets as the population ages. If citizens invest more, European companies could benefit from increased financing, and national governments would face less pressure to provide public support in the future.
A crucial step towards achieving this goal is the introduction of an EU-backed “retail savings product” label. Such a label would signal to consumers which investment products meet standards for diversification, low fees, and long-term suitability. At present, while some retail investment products are available, access to these options remains uneven across EU countries, and consumer trust is lacking due to inconsistent marketing and complicated regulations. An EU label would streamline these offerings, eliminate some of the existing red tape, and ultimately encourage more investors to participate in the capital markets.
Albuquerque will likely have the support of Commission President Ursula von der Leyen, who has prioritised savings in the EU’s broader financial agenda, as well as European Central Bank President Christine Lagarde, who has expressed support for such efforts. However, EU finance ministries remain cautious, and achieving change will require overcoming entrenched resistance to new EU-level actions. Albuquerque’s strategy must focus on engaging the entire financial ecosystem, rather than seeking a one-size-fits-all solution.
Despite previous setbacks—such as the failed Pan-European Personal Pension Product (PEPP), which has struggled to gain traction since its launch in 2019—there is still considerable potential to unlock. With only one provider managing a meager €11 million across four countries as of March 2024, the PEPP’s poor performance highlights the difficulties of scaling such programs.
To make meaningful progress, Albuquerque must tackle the issue from multiple angles. The EU should create a uniform label for retail savings products that meet specific criteria, such as diversification and low administrative costs. Products that earn this label could be exempted from certain consumer protection regulations, thereby reducing the barriers to entry for non-professional investors.
Member states should also consider allowing these EU-labelled products to be used in tax-advantaged savings vehicles, including occupational pensions and retirement plans. While tax incentives can encourage adoption, the products themselves should be compelling enough that they do not rely solely on tax breaks to attract customers. Full harmonisation across the EU is not a prerequisite, but pooling best practices from different countries could help standardise offerings and increase investor confidence.
For financial institutions, adapting to this new framework may require lowering fees, but the payoff could be significant access to a much larger pool of retail investors. On the consumer side, the introduction of an EU label could go a long way toward improving financial literacy and building trust in long-term, market-based investments, which often seem too risky or complex for many households.
With these foundations in place, the EU could foster a more dynamic and competitive financial environment, offering a variety of products such as equity funds, mixed portfolios of stocks and bonds, or target-date funds designed for retirement. There could also be incentives for funds that prioritise investments in European companies or support the green transition. These moves would not only benefit individual savers but also help boost the real economy and ease pressure on national budgets.
Though the EU already has a well-established investment framework through its UCITS system, many of these funds are still perceived as risky or difficult to navigate. Moreover, access to wealth-building tools remains limited, particularly in the form of occupational pensions, which are not universally available across member states.
If implemented effectively, these measures could lead to a more robust and sustainable savings culture in Europe, benefiting households, financial firms, and the broader economy. For this to succeed, however, EU leaders must commit to a coordinated effort to remove the obstacles that currently hinder retail investment in Europe’s capital markets. Albuquerque has a rare opportunity to make a lasting impact—one that could define her term as a key moment in the EU’s financial evolution.
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