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.
January 2025 IORP Risk Dashboard
Key observations:
The January 2025 Risk Dashboard on Institutions for Occupational Retirement Provision (IORPs) shows that risks in the European IORP sector are stable and overall at medium levels, with ongoing signs of vulnerabilities stemming from market volatility.
With regard to macro risks, 10-year swap rates showed an increase, while forecasted GDP growth and inflation held steady at the end of December 2024. Geopolitical tensions are reshaping global dynamics, heightening concerns about declining international cooperation and escalating risks and uncertainties in the years to come.
Market and asset return risks continue to be assessed at a high level. While market volatility stabilised towards the end of December, it remains above historical standards. Real estate prices kept sliding across the Euro Area, although less sharply than in the previous quarter.
Liquidity risks are showing a decreasing trend, driven by positive developments in IORPs’ derivative positions. Within reserve and funding risks, the financial position of defined benefit IORPs' remained robust in the third quarter of last year. Digitalisation & cyber risks are unchanged, with the supervisory assessment of these risks leveling off in the fourth quarter of 2024 following a year of risk increases.