About the author: Christian Gülich, EU Policy Officer at the German Association of Insured (BdV) and Member of EIOPA – Occupational Pensions Stakeholder Group

By 13 January 2023, the Commission shall review the IORPs II Directive and report on its implementation and effectiveness to the European Parliament and to the Council (based on article 62 (1) of EU/2016/2341). Therefore EIOPA as the competent European Supervisory Authority will have to give advice to the EU Commission on this review in 2022. Already now IORPs stakeholders (product providers, representatives of beneficiaries, professional associations, etc.) have the opportunity to gather and point out their most relevant practical experiences and issues of concern to EIOPA.

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From beneficiaries’ perspective transparent, reliable and understandable cost disclosures by IORPs - like for private life-insurances and pension products - are of most important relevance. As the current provisions of the IORPs II Directive on these requirements of cost disclosures before and after contract conclusion are not very detailed, our analysis of this issue is focused on these specific points:

1. Starting Point: IORPs II directive – current provisions
2. Cost disclosure requirements: what is needed?
3. Cost disclosure regulations on EU level in other financial sectors
4. Obligatory and optional cost disclosures by IORPs
5. Conclusion: reassessment of information duties by product providers

This renewal is based on the current EU regulations. As the IORPs II Directive constitutes a minimum harmonisation, national legislators have to possibility - when implementing the revised IORPs II directive – to add stricter requirements. During the national implementation of the current IORPs II directive in Germany in 2018 BdV had publicly asked for additional requirements especially with regard to information duties:

Position Paper (“Stellungnahme”) of 16 July 2018 for Federal Ministry of Finance:
https://www.bundderversicherten.de/files/stellungnahme/pdf/de/2018-07-16-bdv-stellungnahme-ebav-umsetzungsgesetz.pdf

Position Paper (“Stellungnahme”) of 2 November 2018 for Federal Parliament:
https://www.bundderversicherten.de/files/stellungnahme/pdf/de/bdv-stellungnahme-ebav-umsetzungsgesetz-bt-nov18.pdf

Additionally BdV sent comments on EIOPA’s Consultation Paper on draft Opinion on the supervisory reporting of costs and charges of IORPs in July 2021:
https://www.bundderversicherten.de/files/stellungnahme/pdf/de/eiopa-cp_costreportingiorps_bdvcomments20210721.pdf

For the German context it would be important, too, to take into consideration the practical experiences of cost disclosures made by “Riester” and “Rürup” pension products (as well for pre-contractual key information documents as for ongoing pension benefit statements). Even though the judicial context is different (the PRIIPs KID regulation cannot be applied, because they are national pension products), the economic challenges due to the low interest rate phase, the reduction of minimum guarantees, high distribution costs or over-calculated biometric costs of longevity remain the same for private and occupational pensions.

But before any national implementation and any “gold-plating” can be envisaged, the review of the current IORPs II Directive has to be completed and adopted on the EU level. That is the reason why this position paper on renewed requirements of IORPs cost disclosures is published: Click here to get to the position paper.