Occupational Pensions: An Opportunity for Governments and Financial Institutions in an Ageing Europe

Morningstar DBRS published a commentary discussing the benefits of occupational pension funds for financial institutions and governments in an ageing Europe:

Key highlights include the following:

-- Europe's ageing population is the key driving force behind the projected increase in public pension expenditures at the EU level between 2022 and 2070.
-- Except for the Netherlands, where approximately 90% of employees have a pension scheme through their employer, the occupational pension market in Europe remains broadly underpenetrated.
-- The total market of occupational pension funds amounted to around EUR 2,555 billion in assets under management in 2023. However, around 60% of the market pertains to the Netherlands.

"Europe's ageing population is intensifying fiscal pressure on state-based pension systems. The development of occupational and private supplementary pensions could mitigate these strains, helping improve pensioners' financial prospects and reducing the risk that governments will have to intervene in the future.", said Javier Rouillet, Senior Vice President, Global Sovereign Ratings at Morningstar DBRS. "Developing the occupational pension market could result in a significant growth opportunity for financial institutions, including insurance companies and banks, potentially boosting their profitability through relatively less capital intensive activities.", said Mario De Cicco, Vice President, Global Insurance & Pension Ratings