The European Insurance and Occupational Pensions Authority (EIOPA) has launched its fifth Europe-wide stress test of occupational pension funds, assessing how institutions for occupational retirement provision (IORPs) would cope with rapid shifts in yield curves and associated liquidity pressures. The 2025 exercise focuses on liquidity risk, including for IORPs with synthetic leverage exposures through derivatives or liability driven funds, and is intended to assess both firm-level responses and potential spillovers from management actions. Two scenarios, developed with the European Systemic Risk Board, simulate sharp interest rate moves in opposite directions. The “yield curve up” scenario assumes an abrupt escalation of geopolitical tensions that disrupts trade, raises commodity prices and weakens the euro, while the “yield curve down” scenario assumes prolonged geopolitical tensions that depress confidence, investment and productivity, leading to lower GDP growth, falling global risk-free rates and a sharp euro depreciation. In both scenarios, the worsening outlook is assumed to trigger loss of confidence and disorderly asset price adjustments, with the stress test designed to gauge liquidity impacts and the ability to manage liquidity under varying conditions. The sample covers European Economic Area countries where total assets of registered IORPs exceed EUR 600 million, with participants selected to represent at least 60% of each national market and prioritising IORPs that use derivatives. Publication of results is foreseen for mid-December 2025 after participants calculate and submit results and supervisors complete a validation process.

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