Item 8. 2016 Market development report on occupational pensions and - - PowerPoint PPT Presentation

Item 8. 2016 Market development report on occupational pensions and cross-border IORPs

OPSG Frederik Vandenweghe Frankfurt, 4 October 2016

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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

• verview on the landscape in the European Economic Area, as well as
• n 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.

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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

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Further changes/additions compared to last years report

• All data as at 31 December 2015 => cross-border IORPs cover
• nly 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

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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.

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Overview of IORPs and Article 4 ring- fenced funds landscape in the European Economic Area (EEA)

• 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

7% 92% 1%

Figure 4: Scheme types - in absolute numbers

• Nr. of DB schemes
• Nr. of DC schemes
• Nr. of hybrid schemes

57% 9% 34%

Figure 6: Scheme type - asset values (in million €)

DB assets (in million €) DC assets (in million €) Hybrid assets (in million €)

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Overview of IORPs and Article 4 ring- fenced funds landscape in the European Economic Area (EEA)

• Deficit in DB schemes (only UK)
• Ireland closed the gap, no liability data received from Cyprus
• However, different valuation rules make comparison difficult

132% 124% 145% 100% 127% 111% 103% 100% 102% 101% 102% 102% 106% 103% 133% 100% 84% 94% 0% 20% 40% 60% 80% 100% 120% 140% 160%

Figure 7: Aggregate assets over total liabilities , in %

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Zooming in on cross-border

• 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)

10 20 30 40 50 60 70 80 90 100 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Figure 14: Developments in cross border IORPs

authorised active after 2005

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Next steps

• Publish report following BoS decision on 29

September.

• Complete database will allow for further

comparison at European and at national level.

Thank you

Frederik Vandenweghe Expert on pensions EIOPA