The Belgian regulator is seeking to improve the information that pension institutions make available to members in defined contribution (DC) plans about how their pensions are built.
It is consulting on recommendations for transparency of fees and returns for members of occupational DC plans.
The consultation and the draft recommendations are the result of an analysis that FSMA carried out in 2016. This examined the extent to which a member could get an accurate and understandable comprehensive picture of all the factors directly or indirectly affecting his or her supplementary pension. These included investment returns and costs deducted from contributions.
The regulator focused on three key documents required by regulation: the pension plan rules, the transparency report, and the pension benefit statement.
It said the aim of the analysis was not only to verify whether pension institutions were complying with all the relevant legal provisions, but also to identify a number of good practices.
The draft communiqué sets out minimum requirements – the FSMA’s expectations based on the current regulations – and “nice to haves”, being recommendations for more transparency.
Its 2016 analysis surveyed 33 pension institutions, 16 of which were pension funds and 17 group insurers, covering more than 1m members. The sample included 12 sector plans and 75 individual company pension schemes.
One of its findings was that many pension institutions did not clearly disclose the deductions they make from contributions, for example for taxes, or risk premia, such as for death coverage.
It also found that where a pension plan is financed through a so-called Branch 21 insurance contract guaranteeing a certain return, in many cases this guaranteed rate was not disclosed in documentation made available to members.