The European occupational pensions sector expanded in 2024, with both membership and asset values rising, according to the European Insurance and Occupational Pensions Authority (EIOPA). In its latest IORPs Q4 2024 factsheet, EIOPA reported that the number of members increased to 74.1 million, while total investments climbed to €2.69 trillion. Favorable equity and bond valuations supported the growth in assets despite a challenging macroeconomic environment. Contributions reached €107 billion over the year, with employers contributing on average two euros for every euro saved by members. Active membership rose to 36.5 million, while 11.4 million individuals received benefits, reflecting a stronger uptake of occupational retirement savings. The data shows that IORPs continue to concentrate their portfolios in four main areas: investment funds, government bonds, corporate bonds, and equities. These categories together account for more than 90 percent of all assets, with €291 billion of that exposure in US equities alone. Compared with 2022, there has been a notable shift in reporting, with around €400 billion of assets reclassified from indirect holdings via investment funds into direct allocations in bonds and equities. Analysts interpret this as a move towards greater transparency in asset reporting. EIOPA and other financial supervisors note that the sector remained resilient through volatile interest rate movements in 2024, with asset growth outpacing liabilities and improving overall funding positions. Yet the transition from defined benefit to defined contribution schemes continues to reshape the landscape. Defined contribution arrangements allow more portability and individual choice, but also leave savers more exposed to equity market risks and longevity pressures. These changes are especially relevant in the context of persistent pension gaps, which disproportionately affect women. Liquidity is emerging as another area of concern. The 2025 IORPs stress test is designed to measure how funds would cope with abrupt interest rate shocks or prolonged downturns in global markets. Regulators have increasingly emphasized the importance of maintaining strong funding ratios at a time when equity and bond markets are prone to sharp swings. The health of occupational pensions ties directly to the EU’s ambition to strengthen its Savings and Investment Union. By encouraging long-term retirement savings, policymakers aim to close pension gaps while channelling more capital into productive European investments. However, the sector is not insulated from global forces. Market turbulence in April 2025 underscored the risks of concentrated exposure, particularly to US equities, which remain a key driver of both gains and volatility. Looking forward, industry observers expect the sector to continue growing in membership and asset base, though the shift from defined benefit to defined contribution schemes will require new approaches to risk management. Heightened geopolitical and economic uncertainty reinforces the need for robust capital buffers. The upcoming results of EIOPA’s 2025 stress test will be closely watched to determine whether Europe’s occupational pension funds are positioned to maintain both growth and resilience in a volatile financial environment. Source: CMS