European Economic Area (EEA) Institutions for Occupational Retirement Provisions (IORPs) hold a total €2.5trn of assets, according to a new report from the European Insurance and Occupational Pensions Authority (EIOPA).

The Financial Stability Report, which used quarterly data from EEA nations, found that €1.7trn of the total assets are held by IORPs in The Netherlands, with the area’s second largest IORP sector being Germany with €238bn.

Meanwhile, Sweden accounted for €166bn and Italy for €161bn.

The report also noted IORP value as a percentage of nations’ gross domestic product, which it dubbed as ‘penetration rates’, noting that The Netherlands rate was more than 200 per cent, while Germany’s rate was 7 per cent.

Sweden and Italy had respective penetration rates of 35 per cent and 10 per cent.

The report stated: “Not only due to their absolute size in terms of asset holdings, but also relative to the country’s economy, Dutch IORPs play an important role in their economy and obviously are the most important provider of occupational retirement income in The Netherlands.

“To the opposite, German IORPs, whilst holding significant asset values of €238bn, are taking a relatively modest role in the German economy.”

The report also noted that the asset value of a sample of EEA IORPs from the third and fourth quarters of 2020 exceeded their value in the fourth quarter of 2019, indicating recovery from the initial shock waves of the pandemic.

Debt instruments accounted for around 50 per cent of EEA IORP’s assets, mostly consisting of sovereign bonds, while the second most prevalent asset type was equities, which accounted for 2 per cent of the average portfolio.

This led EIOPA to comment that IORPs were “potentially most affected by the pertaining low yields in sovereign exposures, but will also be affected should corporate failures materialise and risk premia significantly increase”.

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