After a sharp drop due to the Covid-19 crisis, their rate returned to practically normal in September.
The coverage rates of provident institutions have practically returned to their level of the previous year, according to the indications of the Commission for the High Supervision of Occupational Welfare (CHS PP). They had suffered a sharp decline, after the disruptions of the Covid-19 crisis on the financial markets.
The average coverage rate of provident institutions fell to 110.2% at the end of September, against 102.0% at the end of March, according to a statement released Tuesday. It has thus come close to last year’s rate which reached 111.6% at the end of 2019.
This improvement is explained by the solid recovery of the equity market, affected by a performance of -18% at the end of March and of -1.6% at the end of September, and by that of the real estate which recovered also since March (from -5.4% to -0.9%).
7.5% of provident institutions currently have an overdraft, in other words 7.5% of commitments are not fully covered. Here again, the increase in this rate is clear, since it reached 45.7% at the end of March, without, however, equaling the level of 2019, which stood at 1.1%.
For the CHS PP, “the coronavirus pandemic has impressively demonstrated to what extent market distortions can rapidly and massively affect the financial situation of provident institutions”. The committee therefore recommends adapting the law in relation to the interest rate and the minimum LPP conversion rate.
It also provides for a return to normality for provident institutions in the medium term, provided that the global recovery takes place as expected in 2021. The study covers data from 1342 provident institutions for a total assets of 762 billion euros. frank.