EIOPA launched a consultation on the proposed approaches and considerations for its technical advice and its implementing and regulatory technical standards, as mandated by the Pan-European Personal Pension Product (PEPP) Regulation. The consultation paper sets out EIOPA's current stance to approach the regulation of key aspects of the PEPP, underpinning the idea of establishing a simple, safe, and cost-efficient savings product. The consultation paper presents the objective and the policy approach to draft technical advice and technical standards, along with an explanatory text and a technical annex, where relevant. The consultation ends on March 02, 2020.
The corresponding analysis of the expected impact from key options in the proposed policy is covered under Annex I (Impact Assessment). In developing its proposals, EIOPA sought input from the supervisory community of the insurance and pension sectors and the other ESAs and conducted an active dialog with its stakeholder groups and the Expert Practitioner Panel on PEPP. The resulting key considerations include the following:
- PEPP Key Information Documents (KIDs)—Pre-contractual and annual information on the PEPP and its investment options have to be highly standardized to allow for comparability between PEPPs and for the consumer to track the performance of the chosen PEPP. The information needs to be relevant and tailored to the pension objective of the PEPP. The proposals are built on the experience with packaged retail investment and insurance-based products (PRIIPs) and the Directive on the activities and supervision of institutions for occupational retirement provision (IORP 2), yet tailored to the specificities of PEPP, in particular its long-term nature, while making the PEPP ready for digitalization.
- Cost Cap of the Basic PEPP—The cost-efficiency of the Basic PEPP is enforced by the introduction of a cost cap. In line with the policy objective of PEPP, an all-inclusive approach is suggested, while ensuring a level playing field among providers offering different features and in particular a guarantee on the capital invested.
- Risk-Mitigation Techniques—It is necessary to set out the principle objectives for the risk-mitigation techniques to foster investment strategies leading to better pension outcomes. Clear and auditable criteria are needed to ensure the effectiveness of the chosen risk-mitigation technique.
- Supervisory Reporting and Cooperation Between National Competent Authorities and EIOPA—Enabling an efficient functioning of the PEPP market requires close monitoring and effective product supervision both from a home and host perspective, which is only possible with regular information exchange on PEPP business.
- Product Intervention Powers of EIOPA—Relevant criteria, tailored to the PEPP, have been developed, building on past experience with product intervention powers at the level of the ESAs.
Comment Due Date: March 02, 2020
Keywords: Europe, EU, Insurance, Pensions, PEPP Regulation, PEPP, KID, IORP 2, PRIIPs, Reporting, EIOPA
Previous ArticleIAIS Publishes Newsletter for November 2019
APRA updated the lists of the Direct to APRA (D2A) validation and derivation rules for authorized deposit-taking institutions, insurers, and superannuation entities.
EC adopted a package that includes the digital finance and retail payments strategies and the legislative proposals for regulatory frameworks on crypto-assets and digital operational resilience.
ECB published an opinion (CON/2020/22) on proposals for regulations amending the securitization framework of EU, in response to the COVID-19 pandemic.
FCA is consulting on its approach to the authorization and supervision of international firms operating in UK.
MAS published amendments to Notice 637 on the risk-based capital adequacy requirements for reporting banks incorporated in Singapore.
FCA announced that it will move firms to RegData from Gabriel in the coming months in stages, based on the reporting requirements of firms.
ISDA issued a letter to regulators to flag that it now expects the supplement to the 2006 ISDA Definitions and the Interbank Offered Rate (IBOR) Fallbacks Protocol to be effective around mid- to late-January 2021.
APRA has concluded its review of the comprehensive plans of authorized deposit-taking institutions for the assessment and management of loans with repayment deferrals.
ESAs (EBA, EIOPA, and ESMA) published the first joint report that assesses risks in the financial sector since the outbreak of the COVID-19 pandemic.
BoE and HM Treasury confirmed that the COVID Corporate Financing Facility (CCFF) will close for new purchases of commercial paper, with effect from March 23, 2021.