07/07/2011
By Adam Cadle
Sovereign risk is the main source of concern for the financial stability of the European occupational pension and insurance sectors, an updated report by the European Insurance and Occupational Pensions Authority (EIOPA) has found.
EIPOA’ s financial stability committee found that the rate at which this risk will materialise, impacting on the financial sectors, depends upon the process of the sovereigns in maintaining sustainable debt levels.
Despite this risk, the report highlighted that the financial positions of the occupational pensions funds have improved slightly and the sectors have therefore built-up additional loss absorbing capacity.
It added that the impact of the financial turmoil on the European occupational pension system had not been as severe compared to other financial sectors, as the long-term nature of the liabilities afforded some protection.
In addition to the risks, the report also covered developments in the occupational fund market as of April 2011. It found there has been an increase of membership and coverage of IORP’s due to countries implementing reforms to augment occupational pension provision. Also, pension funds have realised that they need to provide more detailed and personalised information to members and have worked towards initiatives in the field of financial and pension education.
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