European Union finance ministers have given the green light to new rules allowing pension firms to offer their products across the 15-nation bloc for the first time.
Bolkestein: Deal is a "great achievement"
Clearing the way for pension providers to operate across borders is seen as an essential step towards relieving the pressure on Europe's patchwork of state pension funds, many of them facing funding shortfalls and rapidly ageing populations.
The agreement, reached on Tuesday at a monthly meeting of EU finance chiefs, is designed to help European multinational firms cut their pension costs by offering staff a single pension scheme, instead of running a different one in each EU country.
EU internal market Commissioner Frits Bolkestein said the deal would allow some multinationals to save up to £40m ($64m ; 56m euros) a year.
"The directive will give European companies and citizens the opportunity to benefit from more efficient pan-European pension funds, and so make an important contribution to tackling the pension time-bomb," he said.
However, some hurdles remain in the form of differing national approaches to the taxation of pension premiums and benefits.
The deal came as France and Austria faced large scale industrial action in protest over government attempts to shore up the pension system by forcing workers to set aside more money for their retirement.
The most critical problem facing Europe's pension system is the continent's ageing population.
It is estimated that by 2050, the number of people over 60 in Europe will have doubled to 40% of the total population, or 60% of the population of working age.
The recent stock market slump has eroded the value of existing pension funds exacerbating the problem.
Tuesday's meeting of EU finance ministers was observed for the first time by their counterparts from the ten eastern and central European countries due to join the EU next year.