The Sound of Economics Where do insurance firms and pension funds invest?
Jul 16, 2025
Join Patrick Hoedjes, a key player at EIOPA, along with researchers David Pinkus and Marie-Sophie Lappe from Bruegel, and former Danish central banker Jesper Berg. They dive into where insurance funds and pension investments are flowing in Europe, debunking myths about capital flight to the U.S. The conversation highlights how generational attitudes towards risk differ and tackles the challenges of voluntary pension plans in Germany. With a look at Denmark's pension models, they discuss the future of retirement savings amid changing policies.
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Key Economic Role of Insurance and Pensions
- Insurance and pension funds play a fundamental role in enabling economic activities by managing risk and providing security.
- This risk management supports business growth and offers citizens financial stability into old age.
European Funds Largely Stay Home
- Around 40% of European insurance and pension funds' investments stay within the EU, with the EU being the largest destination.
- Despite popular belief, these funds tend to overinvest domestically and in the EU relative to global market sizes, underinvesting in the US.
Home Bias in Investments
- Home bias is common with institutional investors investing disproportionately in their own countries.
- Some European countries' funds invest broadly across the EU, while others concentrate heavily at home.