FRANKFURT (Reuters) - A stress test on European Union pension providers show that on the whole they do not have enough assets to cover their liabilities, the European Union’s insurance and pension watchdog said on Wednesday.
The European Insurance and Occupational Pensions Authority (EIOPA) published aggregated results of this year’s stress test of 195 institutions that provide pensions.
The stress test simulated prolonged low interest rates and a plunge in asset prices, a scenario that EIOPA Chairman Gabriel Bernardino called “severe but not implausible”.
The adverse scenario revealed a shortfall of as much as 702 billion euros ($826.68 billion), a level that could harm the real economy, EIOPA said.
“The stress test results show that the risks stemming from shocks ... could also spill over into the real economy with negative implications on economic growth and employment,” said Bernardino.
The tests are not directly comparable to the last round conducted in 2015, but Bernardino said the overall assessment was similar.
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Reporting by Tom Sims; Editing by Arno Schuetze and David Evans