EUROPE - Pension funds consider equity risk, interest-rate risk and the economic cycle to be the most significant challenges they face at present, according to the Committee of European Insurance and Occupational Pension Supervisors (CEIOPS).

In its second biennial financial stability report for 2009, the regulatory body revealed the latest results of its supervisory risk assessment in October 2009, the remaining top 10 risks comprising: credit; currency; longevity; consumer confidence; internal controls, liquidity and property risk.

The assessment - completed by 18 CEIOPS members and observers from countries including the Netherlands, UK, Belgium, and Norway - noted that the relevance of all risks have increased over the last 12 months. The highest increase was recorded in relation to the economic cycle - a challenge identified by 11 supervisors.

Equity risk and interest rate risk, relating to low bond yields, were seen as the most relevant risks, identified by 15 and 13 supervisors respectively. However, internal controls, liquidity, property and credit risk were also seen by pension funds as growing areas of concern over the last year.

Over the next 12 months, supervisors expect further increases in internal control, credit and property risks, while challenges linked to the economic cycle, interest rate, equity and liquidity risk are expected to ease.

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