Achieving “economies of scale” in a “predominantly defined contributions (DC) pensions world” is crucial for institutions for occupational retirement provision (IORPs), the European Insurance and Occupational Pensions Authority (EIOPA) said in its annual report for 2024.

Outlining its work in 2024, EIOPA said the year had been marked by rapid artificial intelligence (AI) developments, geopolitical instability, major weather events and cyber threats.

But in the face of global challenges, EIOPA said it had successfully delivered on its commitments, including building up sustainable insurance and pensions, including addressing protection gaps, and supporting the supervisory community industry in “mitigating the risks of the digital transformation,” and seizing opportunities, “including by further promoting data-driven culture.”

Other achievements included the promotion of consistent and efficient supervision across the continent, including within cross-border businesses, as well as providing “high-quality advice” and policy work, within the context of an evolving society and new financial regulation, EOIPA said.

Nonetheless, for DC pensions, the report highlighted the “critical” need for the pensions industry, "as members and beneficiaries bear both the risks and costs.”

The report stated: “It is essential that IORPs, as providers of occupational pensions, maintain sound business plans to ensure long-term viability and mitigate potential conflicts of interest that could harm their members.”

The next area for development in the IORPs Handbook will be “risk-based supervision […] ensuring a more robust regulatory framework that supports the sustainability and effectiveness of occupational pensions,” EOIPA said.

“From a supervisory standpoint, it is essential that IORPs, as providers of occupational pensions, maintain sound business plans to ensure long-term viability and mitigate potential conflicts of interest that could harm their members.”

Writing in the report’s foreword, EIOPA’s executive director, Fausto Parente, commented: “Despite a challenging year, with a rapidly evolving environment, coupled with financial and human resource constraints, EIOPA remained committed to protecting the public interest by contributing to the stability, effectiveness, and sustainability of the European financial system.”

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