This report from the FSB Regional Consultative Group (RCG) for Europe considers the functioning, vulnerabilities and future challenges for private pension schemes in Europe.

The financial sustainability of pension systems is increasingly becoming a central issue for households and governments in Europe. Ageing populations need to be provided with a secure source of income for retirements that will last longer than in the past. This demographic trend directly impacts the financial equilibrium of traditional pay-as-you-go pension systems. Yet, the current macroeconomic environment and the low level of interest rates in Europe prove particularly challenging for pension funds and life insurers. Finally, these pension providers are key institutional investors, playing an important role in channelling savings to long-term investment.

Based upon results from a survey of supervisory authorities conducted by the RCG, this report considers the heterogeneous nature of the private pension systems across Europe, the different regulatory regimes and the vulnerabilities that they could be exposed to. It aims to provide a solid basis for discussions on the features characterising pension schemes that may impact the functioning and the stability of the financial system and therefore the real economy, along with possible ways to improve their robustness, resilience and efficiency.

This document has been prepared by the FSB RCG for Europe and is being published to disseminate information to the public. The views expressed in the document are those of the RCG for Europe and do not necessarily reflect those of the FSB.