The market risks in Romania are high for occupational pension funds, and the portfolio yield has decreased to 3.2%

EIOPA shows that the average return on investments of occupational pension funds in the European Economic Area has dropped from 6.7% in 2024 to 3.2% in 2025. The sector remains resilient but is exposed to a possible market correction, geopolitical tensions, private credit, and cyber risks associated with advanced artificial intelligence models.

Market risks and those regarding investment returns remain at a high level for occupational pension funds in the European Economic Area, given that portfolio results have decreased from 6.7% in 2024 to 3.2% in 2025. The European Insurance and Occupational Pensions Authority considers that the sector remains resilient but warns about high asset valuations, geopolitical tensions, a possible broader correction, and increasing cyber risks associated with advanced artificial intelligence models.

In short

Market and return risks are the only category assessed at a high level for occupational pension funds. The volatility of bonds and equities decreased until the end of June, but increased again in July, especially in commodity markets.

The return on portfolios, calculated by including unrealized gains and losses, was 3.2% in 2025, compared to approximately 6.7% in 2024. Some funds recorded negative results.

The median fund had 54.8% of assets invested in bonds and 25.1% in equities in the first quarter of 2026. Large funds have a higher exposure to foreign currency assets and low-rated investments.

Defined benefit funds maintain a robust financial position, with a median funding ratio of 125.3%. The indicator was also influenced by the transfer of a significant portion of Dutch funds to defined contribution schemes.

Cyber risks remain at a medium level, but their importance is increasing due to geopolitical tensions and systemic risks associated with advanced AI models. EIOPA calls for the adaptation of cybersecurity protection to European operational resilience requirements.

Occupational pension funds manage contributions accumulated through schemes organized by employers, economic sectors, or social partners. The money is invested for long periods to finance pensions that will be paid to members after they retire.

These funds are different from public pension systems primarily funded by current contributions from employees and employers. They hold portfolios of bonds, equities, investment funds, properties, and other assets whose value changes with financial markets.

EIOPA distinguishes between defined benefit schemes and defined contribution schemes. In a defined benefit scheme, the pension is calculated according to a set formula, and the fund or employer supporting it must ensure that there are sufficient assets to meet the promises.

In defined contribution schemes, contributions are set, but the value of the pension depends more directly on the accumulated amounts and the performance of investments. The risk posed by market declines can thus be borne to a greater extent by the scheme member.

EIOPA's dashboard shows that market risks and those regarding asset returns remain high, even though the volatility of bonds and equities has decreased between the end of March and the end of June 2026.

This improvement has not continued uninterrupted. Geopolitical developments in mid-July have brought back volatility, especially in commodity markets, and the outlook for the next 12 months indicates a new increase in risk.

Supervisory authorities are concerned about the possibility of a broader market correction. Such a correction implies a decrease in asset values after a period in which prices have reached levels considered high relative to economic fundamentals.

A reassessment of risk by investors may lead to sales of stocks and bonds, an increase in required yields for financing companies, and a decrease in the market value of securities already held by pension funds.

The median fund analyzed by EIOPA had approximately 54.8% of assets invested in bonds in the first quarter of 2026, up from 53.3% in the previous quarter. The median exposure to equities decreased from 26.4% to 25.1%.

These weights include investments made through collective investment schemes. A fund may not directly hold a bond or a stock but may be exposed through an investment fund that purchases such assets.

Bonds generally provide more predictable income than equities, but their value can decrease when interest rates rise. The risk also depends on the issuer's ability, whether state or company, to repay the debt.

Equities can generate higher long-term returns but are more sensitive to company results, economic prospects, and changes in investor sentiment. A rapid decline in stock markets can reduce the assets available to funds, even if the loss is not immediately realized through sale.

The return on portfolios remained positive in 2025, at 3.2% of assets. However, this was significantly lower than the level of approximately 6.7% recorded in 2024 and than the results from other favorable years for the markets.

The indicator includes income from investments and changes in value that have not yet been realized. A stock or bond may be worth more or less at the end of the year without having been sold, and the difference is included in the portfolio result.

The distribution shows that some funds recorded negative returns. The situation of individual funds may vary depending on the portfolio structure, the currency of investments, the duration of bonds, the use of derivative instruments, and the timing of purchases.

A decrease in return in a single year does not automatically mean that funds will not be able to meet their obligations. Pension schemes invest for long periods and can go through years with high, low, or negative results.

The effect also depends on the type of scheme. A defined benefit fund must compare assets with future obligations to retirees, while in a defined contribution scheme, fluctuations can more directly affect the value of members' accounts.

The financial position of defined benefit schemes remains robust. The median funding ratio, calculated by comparing assets with the technical provisions required for future pensions, was 125.3% in the first quarter of 2026.

A ratio of 125.3% means that the median fund had assets approximately 25% higher than the calculated value of technical obligations. However, the indicator does not guarantee that every institution is in the same situation.

Comparisons with previous quarters should be made with caution. Approximately one-third of the analyzed Dutch institutions have switched from defined benefit schemes to defined contribution schemes, changing the structure of the sample used to calculate the median.

The median excess of assets over liabilities was 23.5%. This indicator was also influenced by the change in the Dutch system and by negative developments in equity markets.

Macroeconomic risks are assessed at a medium level but have a tendency to increase. The average inflation forecast for the main economic regions relevant to the investments of the funds has been revised from 2.5% to 2.9%.

The economic growth forecast for the next four quarters has dropped from 1.6% to 1.4%. Geopolitical tensions may reduce confidence and economic activity but can also create inflationary pressures through rising energy and transportation costs.

Inflation can affect funds in several ways. It reduces the real value of a pension that is not fully indexed, can increase the obligations of a scheme that promises to protect benefits, and influences monetary policy and the value of investments.

Weaker economic growth can affect company profits and the value of equities. It can also increase the risk that highly indebted companies may face difficulties in refinancing their obligations.

Credit risks remain at a medium level. The differences between bond yields and those of safer assets remained limited at the end of June but increased slightly in mid-July.

The median quality of fund investments corresponds to a rating between AA and A. For the median fund, exposure to assets considered below the recommended investment category was close to zero.

The picture changes when assets are weighted by the size of the funds. At the sector level, low-rated investments represented 5.8%, indicating that some of the largest institutions have more significant exposures to higher credit risk assets.

EIOPA specifically warns about private credit. This includes financing negotiated outside public markets, where there are fewer prices and transactions available for the rapid assessment of a debtor's deterioration.

Public indicators may show that risk remains limited, while issues with private loans become visible later. High financing costs can increase the likelihood of default for highly indebted companies.

Large funds are also more exposed to assets denominated in foreign currencies. The median exposure was approximately 1% of assets, but the weighted average at the sector level reached 25.4%.

This difference shows that the largest institutions invest more outside the currency in which they calculate their obligations. Exchange rates can increase or decrease the value of the investment even if the price of the asset does not change in its original currency.

Funds may use financial instruments to hedge currency risk, but protection has costs and may require additional guarantees when markets move rapidly.

The median direct exposure to properties remained below 1% of assets. However, the weighted average was 5.8%, again indicating a higher exposure of large institutions.

The annual return on properties and the value of real estate investments can be affected by interest rates, demand for commercial and residential buildings, construction costs, and local economic conditions.

Liquidity risks remain at a medium level and show signs of stability. The median ratio of liquid assets remained at 51.4% in the first quarter of 2026.

Liquid assets are those that can be converted relatively quickly into cash without a disproportionate loss. Funds need them for paying pensions, transfers, and guarantees associated with financial instruments.

Contribution flows remained higher than benefit payments for most institutions. The median ratio of inflows to outflows increased from 108.1% in 2024 to 112.8% in 2025.

A ratio above 100% shows that the median fund received contributions greater than the payments made. The situation may differ for mature schemes, with a large number of retirees and fewer active members.

Concentration risks are medium. Median direct exposures to banks and other financial institutions were close to zero, but weighted averages reached 5.7% and 5%, respectively, indicating a different situation for large funds.

The median direct exposure to the public debt of the home country was approximately 1.2%, while the weighted average was 4.9%. Concentration can become problematic when a large part of the portfolio depends on the same category of assets, the same sector, or the same country.

Environmental, social, and governance risks remain at a medium level. Green bonds represented 9.7% of the median corporate bond portfolio, following a trend of increase that began in 2022.

Investments in activities eligible according to the EU taxonomy have slightly decreased to 14.8% of the equities and corporate bonds of the median fund. Eligibility shows that the activity is covered by the taxonomy, without automatically meaning that it meets all conditions to be considered aligned.

The median exposure to climate-relevant assets increased from 0.6% to 0.7%. The weighted average rose more sharply, from 8.7% to 10%, indicating a higher exposure in the portfolios of large institutions.

The indicator may underestimate risk because some assets could not be fully classified due to insufficient data. Among the sectors considered relevant are agriculture, fossil fuels, utilities, energy-intensive industries, transportation, and housing.

Digitalization and cybersecurity risks are still assessed at a medium level, but supervisory authorities believe that their importance has increased in the second quarter of 2026.

EIOPA links this deterioration to geopolitical uncertainty and systemic risks associated with artificial intelligence models at the forefront of technological development.

Pension funds use information systems to record contributions, manage accounts, payments, investments, and communicate with members. An incident can compromise personal data, disrupt operations, or affect access to services.

The dependence of several institutions on the same cloud, software, or management providers can turn an incident at a single company into a problem for multiple funds.

Advanced AI models can support the identification of vulnerabilities and the detection of attacks, but can also be used to automate malicious campaigns, create more convincing fraudulent messages, or quickly find weaknesses.

EIOPA calls on financial entities to adapt their security capabilities and comply with the requirements of the Digital Operational Resilience Regulation. This includes managing IT risks, reporting incidents, testing systems, and controlling dependencies on external providers.

Assessing cyber risks does not mean that European pension funds are already facing a cybersecurity crisis. It shows that the likelihood and potential impact of incidents have become more important for supervisors.

The dashboard uses information from 625 institutions providing occupational pensions in the European Economic Area. Quarterly data mainly refer to the first quarter of 2026, while annual indicators refer to the end of 2025.

Market information is generally updated until the end of June 2026. Some observations regarding volatility and geopolitical tensions also include developments from mid-July.

The level indicates the current situation of each risk category, the trend compares the evolution with the previous quarter, and the outlook describes the expected direction for the next 12 months.

The outlook is built on the responses of 17 national supervisory authorities. It represents an assessment of the direction of risks, without predicting the occurrence of a loss or a crisis at a specific moment.

Institutions providing occupational pensions manage schemes created in connection with professional activity and are regulated separately from public systems and individual pension products. Risks can be borne by the fund, the employer financing it, or by members and beneficiaries, depending on how the scheme is constructed.

EIOPA's assessment from July 2026 describes a sector with still robust financial and liquidity positions but exposed to high market risks, lower investment returns, and more challenging prospects due to geopolitics, inflation, and cyber threats.

https://2eu.brussels/ro/news/riscurile-de-piata-raman-ridicate-pentru-fondurile-ocupationale-de-pensii-iar-randamentul-portofoliilor-a-scazut-la-32