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Eiopa reports 14% growth in Iorps

Wednesday 27 July 2011 - by Jacqui Street

The European Insurance and Occupational Pensions Authority says the market for cross-border arrangements of Iorps remains small but is growing.

Eiopa's fifth report on market developments in cross-border Institutions for Occupation Retirement Provision has found the total number of new cross-border Iorps went up by 11, or an increase of 14 per cent between June 2010 and June 2011.

But there were also five Iorps that ceased cross-border activity in the same period, making the total a rise from 78 to 84, or an increase of 8 per cent.

Member states were asked to identify cross border activity from the perspective of the "home state".

Eiopa acknowledged the data should be treated with caution, as it is difficult to define cross-border Iorps because states have "different approaches as to how they identify and/or recognise a cross-border arrangement".

"Of the 11 Iorps reported as newly engaging in cross-border activity, five were reported as providing defined contribution type benefits in the host state, and six were identified as providing defined benefits in the host state," said Eiopa.

The majority of cross border activity occurred between Ireland and the United Kingdom with the UK now hosting 24 Iorps from Ireland, and Ireland hosting 13 Iorps originating in the UK.

In an additional report, Eiopa surveyed pension scheme members in 17 EU countries about the risks they perceived to their defined contribution schemes.

The report notes that defined contribution schemes are increasingly favoured over defined benefit schemes, but this change poses more risks to members.

The survey found those in defined contribution facilities were most concerned about the market risk to their accumulated assets and not having enough contributions in their initial joining phase.

The survey also found those in pension schemes were worried about a lack of member understanding and the risk of inflation as their pensions accumulated.

Eiopa warns that pension members will bear the most risk in defined contribution schemes but have the least amount of say in the funds' direction.

The authority hints that programmes for greater member education and awareness should be included in future defined contribution schemes.

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