German pension association relieved at PRIP exemption
Occupational pension funds are unlikely to be impacted by the Key Information Document (KID) proposed as part of the regulation proposed for packaged retail investment products (PRIPS) after the European Parliament and Council last week agreed on a new draft for the law.
The latest, and likely final, version of the text offered a revised definition of pension products excluded from the regulation, including IORPs and “pension products which, under national law, are recognised as having the primary purpose of providing the investor with an income in retirement, and which entitle the investor to certain benefits”.
Furthermore, individual pension products are excluded “for which a financial contribution from the employer is required by national law and where the employer or the employee has no choice as to the pension product or provider”.
Germany’s pension association aba welcomed “the clear exemption of occupational pensions” and its managing director Klaus Stiefermann said the change would be a “relief – not only in Germany”.
He added occupational pensions were “not a ‘financial product’ but at core they are a voluntary social benefit offered by employers as part of an employment contract”.
Stiefermann stressed information regulations for Pensionskassen and Pensionsfonds were already set down “where they belong” – within the current and recently revised draft of the IORP directives.
However, as part of the compromise reached for the PRIPS, it was agreed that the regulation would be reviewed after four years specifically with the intention of broadening its scope.
The text states the commission should then assess “whether to maintain the exclusion of pension products which, under national law, are recognized as having the primary purpose of providing the investor with an income in retirement, and which entitle the investor to certain benefits”.
IORPs are not explicitly referenced in the review proposal.
The review would also examine whether the additional information had actually helped consumers and whether new products had enetered the marketto which the regulation did not apply.