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Belgian regulator praises buffers, sponsor strength in wake of stress tests

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Substantial buffers and solid sponsors are the main reasons Belgian occupational pension funds fared well in the stress tests conducted by the European Insurance and Occupational Pensions Authority (EIOPA), the Belgian regulator has said.

Sixteen Belgian occupational pension funds participated in the stress tests, accounting for 57% of the total assets under management by Belgian IORPs, according to the Belgian Financial Services and Markets Authority (FSMA).

The results, published earlier this week, concluded that the pensions sector posed only a limited risk to financial stability.

“The Belgian pension fund sector is highly resilient, even under extremely stressful economic circumstances,” said FSMA, echoing similar statements by its Dutch and UK counterparts.

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“That is the message of the results of the European stress test for occupational pension funds.”

It said the results were positive when examining the outcome under the Belgian National Balance Sheet (NBS) and the holistic balance sheet (HBS), the common methodology devised by EIOPA to enable a cross-border comparison of IORPs.

The FMSA attributed the positive outcome principally to the large buffers maintained by the pension funds tested but also the presence of strong sponsors.

“Belgium is thus one of the top five states able to maintain full coverage of their commitments in all stress scenarios,” it said.

The Belgian pension fund association, recently renamed from the Belgian Association of Pension Institutions (BAPI) to PensioPlus, was also pleased with the stress test results.

It said the outcome demonstrated the resilience and sustainability of Belgian IORPs in unfavourable economic conditions.

It stressed, however, that the results were based on general scenarios and models, and that every pension fund should carry out its own risk management and asset-liability management study, or conduct its own stress tests.

“Indeed,” said Philip Neyt, president of PensioPlus, “this is a fundamental part of good governance of every pension fund.”

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