The European institutions for occupational retirement provision (IORPs) sector is “stable” in regards to risks but there are “signs of vulnerabilities” stemming from market volatility, according to the European Insurance and Occupational Pensions Authority’s IORP Risk Dashboard.

The IORP Risk Dashboard is based on the latest IORP reporting data with reference up to Q2 2024. It summarises the main risks and vulnerabilities in the IORP sector of the European Economic Area (EEA) for DC and DB schemes through a set of risk indicators. The data is based on regulatory reporting collected from 625 IORPs.

All but one category assessed was rated as the risk being medium level, putting the sector at a medium level overall. Market and asset return risks were rated as “stable but at a high level”, with market volatility receding at the end of September, but remaining above historical standards.

“Real estate prices continued to decline across the Euro Area although to a lower pace than last quarter (-7.5 per cent in the last quarter of 2023 from -8.2% in the previous quarter), mainly driven by commercial property prices,” EIOPA noted.

Regarding macro risks, rated medium, EIOPA said inflation forecasts show further declines and forecasted GDP growth remains stable compared to the previous quarter.

For credit risks, rated stable at a medium level, the authority said credit default swap (CDS) spreads for corporate bonds decreased at the end of September 2024, while remaining broadly stable for government bonds.

In addition, reserve and funding risks were also unchanged at a medium level, with the financial position of DB IORPs' remaining robust in Q2, supported by higher interest rates. EIOPA found that digitalisation and cyber risks were also stable at a medium level but it has a “downbeat outlook for this risk category on the back of ongoing geopolitical tensions and related uncertainties”.

All other risk categories are currently assessed at medium levels and include liquidity risks, concentration risks, and ESG-related risks. EIOPA said the median share of IORPs’ investments in green bonds over total corporate bonds continued increasing, standing at 7.2 per cent in Q2 2024 (from 6.6 per cent in Q1.

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