Portugal's Insurance and Pension Funds Supervisory Authority (ASF) published its June 2025 risk dashboard for the pension funds sector, keeping macroeconomic, credit and market risks assessed at a medium-high level. Liquidity and interlinkages remained rated medium-low, while the profitability and solvency risk of pension fund management companies (SGFP) stayed low, and the specific risks of defined benefit and defined contribution plans remained at medium-low after being revised upward in March 2025. Macroeconomic risk remained medium-high on the back of elevated global uncertainty linked to armed conflicts in Eastern Europe and the Middle East and uncertainty around United States trade policy and potential tariff impacts on European and Portuguese growth. Credit risk stayed medium-high despite a reduction in sovereign risk premia since late April 2025, with ASF highlighting ongoing geopolitical vulnerabilities and the risk that higher defence investment could worsen sovereign debt levels. Market risk also remained medium-high, with lower bond and equity volatility since late April but a slight uptick in June linked to the Iran-Israel conflict, alongside continuing risk of material asset price corrections if trade negotiations are unsuccessful. For liquidity, the asset liquidity ratio fell 1.7% year on year to 63.3%. SGFP metrics improved, with average return on equity at 14% in 2024 and an overall solvency margin of 214.4% at end-2024, up 19 percentage points from end-2023. Interlinkages risk reflected slightly lower exposures to Portuguese sovereign debt and financial-sector issuers, but a slight increase in asset concentration by economic group. Specific risks for defined benefit and defined contribution plans were linked to negative average returns in the latest quarter analysed (-1.8% for defined benefit plans and -0.4% for defined contribution plans), with defined benefit plan average funding ratios at end-2024 of 104.9% under the funding scenario and 109.2% under the minimum value scenario.
Portuguese Insurance Regulator (ASF) 2025-07-28
Portugal's Insurance and Pension Funds Supervisory Authority rates macro, credit and market risks for pension funds as medium-high in June 2025 risk dashboard
Portugal's Insurance and Pension Funds Supervisory Authority (ASF) released its June 2025 risk dashboard, maintaining macroeconomic, credit, and market risks at medium-high levels. Liquidity and interlinkages risks were rated medium-low, while profitability and solvency risks for pension fund management companies remained low. Specific risks for defined benefit and contribution plans were medium-low, with negative returns noted last quarter.