The German financial supervisory authority, BaFin, has published three new circulars on governance and risk management in occupational pension institutions.
The circulars affect members of management and supervisory boards, and people who are responsible for key tasks in certain second pillar schemes, the supervisory authority said in a note sent out today.
The circulars clarify professional and personal requirements that management and supervisory board members, and people responsible for key tasks, have to fulfil to hold those positions, and reporting obligations, it added. They replace other circulars from 2018.
Occupational pension institutions must now describe in detail the jobs available and qualifications required for management positions, and for people that will be responsible for key functions, among other things. They must also justify why a candidate is suitable for that position, the regulator said.
Within an occupational pension institution, administrative and supervisory board members must control and monitor executive board members, and actively support the development of the institution, according to one of the circulars.
Executive board members must have qualifications, risk management knowledge and experience to be able to provide “solid and prudent” management of the company, according to another circular.
Administrative or supervisory board members must be at all times in a position to understand the business carried out by the pension institution, risks and, if necessary, implement changes to management, it added.
They must be familiar with regulations impacting the institution, and learn about risk management in the absence of knowledge about the topic.
The supervisory authority will take into account specific characteristics of company pension schemes with regard to the composition of the supervisory body when assessing the governance of the institutions.
In the circulars BaFin warned about conflict of interests of administrative and supervisory board members, who can hold a maximum of five mandates at the same time.