Item 8. 2016 Market development report on occupational pensions and cross-border IORPs OPSG Frederik Vandenweghe Frankfurt, 4 October 2016
Background note on 2016 market development report 1. What is the issue about? 10th report in a series of reports focussing on IORPs and art. 4 ring- fenced funds that follow the IORP Directive. The report provides a brief overview on the landscape in the European Economic Area, as well as on the developments in cross-border arrangements of IORPs. 2. Why is the issue on the agenda? Item for information 3. What are the next steps? Publish report following BoS decision on 29 September. Continue to monitor the IORP landscape at EU and national level. This will require complete datasets. 2
OPSG feedback on 2015 market development report • Limited scope (not including group insurance or book reserves) Assets expressed as per cent of each country’s GDP Distinguishing between small and large pension arrangements • Expanding on reasons behind developments like asset performance or changes in discount rates or inflation assumptions Distinguish legacy schemes from the post-2005 newly established cross- border IORPs • Member states to quantify cross-border assets in future reports 3
Further changes/additions compared to last years report • All data as at 31 December 2015 => cross-border IORPs cover only the period between 1 June 2015 and 31 December 2015 • Split between number of IORPs and number of schemes • Number of multi-employer IORPs • Amount of members (active and deferred) • Amount of contributions and benefits paid • Assets over liabilities by country • Cross-border trends since the first market development report • Growth of existing cross-border IORPs • Annex on roundtable on cross-border IORPs 4
Overview of IORPs and Article 4 ring- fenced funds landscape in the European Economic Area (EEA) Number of Assets (in million € ) of IORPs 112,789 3,573,225 Article 4 ring-fenced funds 37 257,475 Article 17(1) IORPs 451 1,226,571 Total assets of IORPs and Article 4 ring-fenced funds increased by 4%. Last • year there was a 13% increase. Further increase in number of IORPs as result of increase in Irish IORPs. • Only very small percentage of IORPs directly subject to minimum capital • requirements set at European level. 5
Overview of IORPs and Article 4 ring- fenced funds landscape in the European Economic Area (EEA) Figure 4: Scheme types - in Figure 6: Scheme type - asset absolute numbers values (in million € ) 1% DB assets (in million 34% 7% € ) Nr. of DB schemes DC assets (in million 57% € ) Nr. of DC schemes 9% 92% Hybrid assets (in Nr. of hybrid schemes million € ) • The majority of schemes are DC schemes, • However, only small number of the total asset value • Increase in DC schemes higher than in DB and hybrid schemes 6
Overview of IORPs and Article 4 ring- fenced funds landscape in the European Economic Area (EEA) Figure 7: Aggregate assets over total liabilities , in % 160% 145% 133% 132% 140% 127% 124% 120% 111% 103% 100% 102% 101% 102% 102% 106% 103% 100% 100% 94% 100% 84% 80% 60% 40% 20% 0% • Deficit in DB schemes (only UK) • Ireland closed the gap, no liability data received from Cyprus • However, different valuation rules make comparison difficult 7
Zooming in on cross-border Figure 14: Developments in cross border IORPs 100 90 80 70 60 authorised 50 active 40 after 2005 30 20 10 0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 • Cross-border schemes remain small (only 1.7%) compared to the total assets • Only slight increase in cross-border IORPs • DB schemes even more prevalent in cross-border IORPs (90% of the assets) 8
Next steps • Publish report following BoS decision on 29 September. • Complete database will allow for further comparison at European and at national level. 9
Thank you Frederik Vandenweghe Expert on pensions EIOPA
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