Objective
Stress tests are an important supervisory tool to examine the sensitivity of the occupational pensions sector to adverse market developments and to reach robust conclusions for the stability of the financial system as a whole and to enhance consumer protection.
The aim of the exercise in 2015 is to test the resilience of defined benefit (DB) and hybrid pension schemes against adverse market scenarios and increase in life expectancy as well as to identify potential vulnerabilities of defined contribution (DC) schemes.
In parallel with the stress test EIOPA carries out a Quantitative Assessment (QA) on its work on solvency for IORPs to further educate its advice to the European Commission. The timing of the stress test and the Quantitative Assessment has been aligned to minimise the administrative burden for participating IORPs and NSAs (common technical specifications, templates and processes, including launching and submission dates, Q&A and quality assurance processes).
Stress test results
The stress test shows that a prolonged period of low interest rates will pose significant future challenges to the resilience of defined benefit Institutions for Occupational Retirement Provision (IORPs). The exercice also highlighted that IORPs are relatively more resilient to an increase in longevity than to market adverse scenarios.
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Questions and answers
For any queries related to this exercise, please fill in the template you can find under related elements and send it to your National Competent Authority (NCA). The template and the email addresses of the NSAs can be viewed in the download section under "Questions & Answers on the Stress Test 2019".
Working process
The stress test has been designed for the countries where the IORP sector exceeds 500 million euros in assets. The following Member States fall within this scope: Austria, Belgium, Cyprus, Germany, Denmark, Spain, Finland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Sweden, Slovenia, Slovakia and the United Kingdom.
The exercise is conducted in close cooperation with the national supervisory authorities (NSAs): the NSAs will identify and contact prospective participants in the test.