Key achievements: Driver 5

Financial Sustainability

Long‑term financial sustainability is part of the EPO’s overarching goal, set out in SP2028, of becoming a more sustainable organisation. In this context, the Financial Study Phase I (CA/68/23) provided a comprehensive long‑term projection of how the EPO’s finances were expected to evolve between 2023 and 2042. It confirmed that the six measures adopted in 2020 to address the funding gap had a positive impact, substantially improving the Office’s long‑term financial position to a positive surplus of EUR 4.2 billion over the next 20 years. However, sensitivity analyses highlighted ongoing exposure to capital market fluctuations and inflation, which could affect the EPO’s future funding requirements.

Phase II of the Financial Study (CA/23/24) therefore aimed to identify options for optimising available funding sources and to define a comprehensive funding plan to achieve full coverage of all long‑term obligations. The Office also proposed a set of orientations to further strengthen long‑term financial sustainability (CA/39/24), on which progress continued in 2025, such as the creation and funding of buffers (Operational Reserve for short-term liquidity needs: €2.5 billion, Sustainability Fund for extra-ordinary circumstances: €1.0 billion, SAM buffer for mitigating risks arising from the pending ILOAT judgment on the salary adjustment method: €2.0 billion) and the preparation of the insourcing of EPOTIF asset management to the RFPSS. 

During 2025, the Office implemented the following actions stemming from the recommendations of the Financial Study Phase II (CA/23/24):

• Financial risk management and monitoring framework: Following the validation by the Council of the Financial Risk Management and Monitoring Framework in December 2024 (CA/89/24), the Financial Study KPI dashboard was developed in the first half of 2025. The dashboard shows risk KPIs in three categories: strategic, macro-economic and operational. All members of the Budget Finance Committee and Administrative Council have access to the dashboard, allowing them to monitor the EPO’s progress towards securing long-term financial sustainability.
• Insourcing of EPOTIF asset management: In December 2025, the Administrative Council approved the insourcing of the asset management of EPOTIF to the Administration of the RFPSS (CA/68/25). The project planning phase was well underway in 2025, while work in 2026 will focus on the adaptation of internal and external asset management services and investment management platforms to the EPOTIF requirements, on the amendment of regulations, reviewing the strategic asset allocation and terminating the agreements with the external asset managers and the capital management company (KVG). The liquidation of EPOTIF assets held by the three external asset managers and reinvestment of the cash proceeds by the Fund Administration is planned for the first quarter of 2027.
• Build financial security buffers: The Financial Study Phase II defined a funding strategy targeting a funding level of 105% for all benefit liability plans. During 2025 the Office continued with the implementation of the funding plan, achieving a funding level of 88.0% at the end of the year, compared to 80.1% in December 2024. At the end of 2025, the buffer for the litigation on the salary adjustment method (SAM buffer) reached the target value of EUR 2 billion. This comprises, EUR 1 340 million in dedicated cash injections and EUR 660 million that were gained as investment returns on the entire EPOTIF.
• Applying the new risk tolerance policy of the EPO to the funding of pension and social security schemes: The Actuarial Advisory Group carried out an actuarial study in 2025, consisting of the periodic review of demographic and financial assumptions, and the application of the new risk tolerance adopted by the Office following the Financial Study, resulting in an alignment of the discount rate. The result was an increase of the pension contribution rate from 32.1% to 37.8%. Also, the contribution rate to the New Pension Scheme was increased from 28.5% to 33.9%, the contribution for healthcare was increased from 9.6% to 10.5%, and the long-term care contribution rate was maintained at 1.8%. The new rates are applied from 1 January 2026 and represent a shared effort between EPO and staff to safeguard the financial sustainability of our pension and social security schemes. 
• Review of the salary adjustment method and of the financial impact of the bundle of measures of the 2019 Financial Study: In December 2025, the EPO presented to the Administrative Council a review report of the salary adjustment method adopted in 2020 (CA/79/25). This review confirmed that the current method has achieved its key objectives for the period 2021-2026, including maintaining long-term financial sustainability, managing salary growth in line with economic conditions, and preserving parity of purchasing power among places of employment. The orientations for the new method were submitted to the Administrative Council in March 2026 for opinion, with the aim of submitting a final proposal to be decided in June 2026. Also in December 2025, the Office provided a review of the impact of the financial measures adopted by the Administrative Council following the 2019 Financial Study (CA/86/25), concluding that the implementation of the measures was ahead of the expected progress, having already delivered realised gains of EUR 3.2 billion.

Figure 25 – SP2028 Financial sustainability pipeline

The KPIs under the Financial sustainability driver continued to show robust performance in 2025.

Productivity showed a sustained upward trend throughout the year, reaching a new record level of 115.6 SEO products per FTE in December 2025. This performance surpassed the KPI annual target and represented a 3.7% year-on-year improvement. In addition, total production closed the year 1.3% above the annual plan.

The funding level measures the extent to which the EPO can cover its long-term pension and social security obligations (referred to as DBOs standardised at 4.6%) by means of the total RFPSS market value. This indicator evolved from 80.1% at the end of 2024 to 88.0% at the end of 2025, mainly driven by the robust operational result and the strong financial markets performance recorded in 2025.

²³ The value of the defined benefit obligations is calculated using the standardised discount rate of 4.6%.