The Dutch financial markets regulator AFM has urged members of the European Parliament to protect proposed pension cost transparency requirements under the ongoing review of the IORP II Directive.
In a position paper published in the context of the review, the AFM said meaningful cost transparency was essential for pension scheme members and expressed support for the European Commission’s proposals to strengthen cost disclosure requirements.
The regulator argued that transparency about all pension costs, including both direct and indirect costs, would help members understand their pension outcomes, while supporting accountability by pension providers and contributing to effective governance and trust in pension systems.
However, the AFM raised concerns about proposed amendments that it said could weaken transparency by limiting the scope of cost disclosure.
The regulator’s intervention comes as discussions on the IORP II review continue in the European Parliament.
The AFM said comprehensive disclosure of pension costs was important to enable scheme members to understand how costs affect their pension outcomes.
It also argued that transparency could strengthen accountability among pension providers and support effective governance of pension schemes.
The position paper sets out the AFM’s support for the European Commission’s proposals to strengthen the cost disclosure requirements under IORP II, while highlighting its concerns about amendments that could narrow the information subject to disclosure.
The EU Council agreed its negotiating position on the IORP II revision in June, saying the proposed changes aim to increase transparency around costs and returns for pension users.
Earlier this year, the European and Asset Management Association (EFAMA) took a different view, calling for a more proportionate, principles-based approach to cost transparency under IORP II.
The association has argued that allocating costs to individuals in collective pension schemes can be impractical and risk creating misleading signals, while cost disclosures without sufficient context could encourage a focus on lower-cost investments at the expense of long-term pension outcomes.
The AFM said the issue was particularly important in the context of pension members’ ability to understand their outcomes and the broader need to maintain trust in pension systems.
The regulator’s position adds to the ongoing debate over how the revised IORP II framework should address pension costs and the information that should be made available to members.
