Quarterly risk assessment of the occupational pensions sector
The IORP risk dashboard, based on individual occupational pensions regulatory reporting, summarises the main risks and vulnerabilities in the IORPs sector of the European Economic Area (EEA) for defined contributions (DC) and defined benefits (DB) pension schemes.
It includes a set of risk indicators covering risk categories, such as
- market and credit risks,
- liquidity risks,
- reserve & funding risks,
- ESG risks, and
- cyber risks.
October 2024 IORP Risk Dashboard
Key observations:
The European Insurance and Occupational Pensions Authority (EIOPA) published today its October 2024 risk dashboard for institutions for occupational retirement provision, which shows that risks in the European IORP sector are stable and overall at medium levels, with signs of vulnerabilities stemming from market volatility.
Macro risks are at a medium level with inflation forecasts showing further declines and forecasted GDP growth remaining stable compared to the previous quarter. Credit risks remain stable at a medium level with credit default swap (CDS) spreads for corporate bonds decreasing at the end of September 2024, while remaining broadly stable for government bonds.
Market and asset return risks are stable at a high level, with market volatility receding at the end of September, but remaining above historical standards. Real estate prices continued to decline across the Euro Area, although less sharply than in the previous quarter.
Reserve and funding risks are unchanged at a medium level, with the financial position of defined benefit IORPs' remaining robust in the second quarter of the year, supported by higher interest rates. Digitalisation & cyber risks are stable at a medium level but with a more downbeat outlook for this risk category on the back of ongoing geopolitical tensions and related uncertainties.
All other risk categories are currently assessed at medium levels.