Figures released by the European Central Bank (ECB) show that the combined value of pension funds in the Eurozone increased by €23bn to €1.413 trillion throughout the first quarter of 2011.

At the same time, pension fund liabilities across the single currency area increased to €1.386 trillion, meaning that the combined Eurozone occupational pension system was €26bn in surplus.

Shares continue to be the most held asset class across Eurozone pension funds with some €725bn in equities or equity funds at the end of the first quarter of 2011, according to the ECB. Direct investments in equities declined from a combined €150bn to €144bn during the opening quarter, while assets held in securities rose by €11bn to €301bn.

The ECB figures reveal that 76.6% of Eurozone households with money in pension funds invest in defined benefit schemes, while 17.5% of households saving or claiming a pension are invested in defined contribution schemes. The remaining 5.9% are in hybrid schemes.

Insurance corporation's total financial assets were calculated at €5.5 trillion at the end of March 2011, four times as high as pension funds. This reflects the importance of insurance companies in providing pensions and other personal financial services in major markets such as France and Germany.

This is the first time that the bank has released figures on the financial value of Eurozone pension funds and is an attempt by the Frankfurt-based institution to monitor the European financial system more widely.

An ECB press release says that "The new dataset, which is derived from existing supervisory and statistical sources, provides for more detailed and timely statistics on the assets and liabilities of insurers and pension funds."

Jürgen Stark, a member of the ECB's executive board says that combined insurance company and pension fund assets "account for about one third of all assets of non-bank financial intermediaries within the euro area. That is of course already a sizeable figure, but in view of our ageing societies, those institutions can be expected to be of further increasing significance for the economy and the entire financial system."

"Furthermore, as institutional investors with a significant portfolio in securities, insurance corporations and pension funds will be monitored for monetary policy and financial stability purposes." The ECB is working with the European Insurance and Occupational Pensions Authority (EIOPA) to make their new quarterly figures as accurate as they can be.

First published: 13.07.2011

dbillingham@wilmington.co.uk