EUROPE – The assets of the European Central Bank’s pension fund are less than its liabilities, according to the bank’s annual report for 2003.

“The investment portfolios relating to the ECB pension fund are valued at 91.7 million euros (2002: 61.9 million euros),” the ECB report said.

“The ECB’s obligations in respect of the pension fund, including a provision based on the actuary’s report, amount to 100.6 million euros (2002: 72.4 million euros),” the report adds.

The assets “represent the investments of accumulated pension contributions by the ECB and the staff of the ECB as at 31 December 2003”. The assets are managed by an external fund manager, who is not named.

The ECB’s total pension cost in 2003, including a provision for disability and postretirement benefits, fell to 21.7 million euros from 27.4 million euros in 2002.

“This cost includes a provision for pensions to members of the Executive Board of 1.9 million euros (2002: 2.1 million euros) and any supplementary contributions.”

And it said that the required rate of future service contributions by the ECB is 16.5% of pensionable earnings of all staff. The central bank said the plan assets are not fungible with other financial assets of the ECB.

Elsewhere, the report says that further changes are necessary in Europe’s pension and health systems to make them sustainable. “One of the most important risks to fiscal sustainability in the euro area arises from population ageing,” it said.

“As current contributions finance current expenditure, the rising number of pensioners will put these systems under strain.”