EIOPA: Europe’s occupational pensions sector ‘remains resilient’ | The news

The European occupational pension sector remains resilient, although sensitive to monetary policy developments, the European Insurance and Occupational Pensions Authority (EIOPA) said in its latest Financial Stability Report.

It said that in response to inflation movements and banking sector turmoil in early 2023, pension funds are prioritising liquidity to hedge interest rate derivatives mismatches.

Market developments in 2023 were mainly positive for Institution of Pension Reserves (IORP) balance sheets due to growth in fixed income and equities assets.

On the other side of the balance sheet, IORP liabilities also increased, with their size depending largely on the type of pension scheme and the valuation method used.

As the increase in the value of liabilities outpaced the increase in the value of assets, the financial situation of IORPs in the European Economic Area (EEA) deteriorated slightly, although the slight decline in the funding ratio (from 120% to 119%) was mainly the result of financial changes in the dominant Dutch IORP sector.

After excluding the Dutch data on surplus assets and liabilities, the remaining IORP sectors in the EEA showed little improvement in the funding ratio.

EIOPA also found that concerns persist about the pension savings gap, especially among women. The Authority advocates for national pension tracking systems and proposes improved analysis of pension fund investment data to address emerging risks and data gaps.

According to EIOPA, at the end of 2022, over 11 million beneficiaries received payments from IORP, of which 47.0% in defined benefit pension plans and 16.9% in defined contribution pension plans.

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