The assets of EU member states' Institutions for Occupational Retirement Provisions (IORPs) increased to €2.77trn in 2021, according to figures from the European Insurance and Occupational Pensions Authority (EIOPA).

This represents a year-on-year increase of €220bn, as assets rose from €2.55trn in 2020.

The assets of defined contribution (DC) pension schemes also rose during the same period, from €339bn to €403bn.

EIOPA stated that this increase in DC assets reflected the continuous gradual transition towards DC schemes.

While there was an increasing focus on DC pensions, they represented only around 13 per cent of IORPs' total assets under management.

Furthermore, EIOPA stated that the estimated penetration rate of IORPs continued to be low, meaning that these holdings are low when compared to the country GBP.

One exception was the Netherlands, with its holdings in IORPs representing more than 200 per cent of the country’s GBP.

Additionally, with the expected introduction of the Future Pensions Act in July 2023, the Netherlands could become the largest DC market in Europe, according to EIOPA.

EIOPA also revealed that IORPs in six out of 16 member states held more than 50 per cent of assets in investment funds/shares, while three out of 16 held between 30 per cent and 40 per cent in government bonds.

“This might flag some lack of diversity in the asset allocation, which might pose future issues in case one of distress of one of those markets,” EIOPA noted.

“A more granular analysis on the type of investments made via CIUs and its breakdown by asset category shows a more balanced structure in some cases, whereas in some others reflects higher concentration towards specific sectors.

“That is the case for Portugal towards real estate; Austria and the Netherlands towards listed equities; and Estonia towards unlisted equities.

“Depending on the sector, this reliance on equity investments might become concerning.”

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