New Information Requirements for Pensionskassen and Life Insurance ensure greater transparency in old-age provision
The Austrian Financial Market Authority (FMA) has published two new rules today that extend the information requirements for pension funds (Pensionskassen). Both the amended Information Requirements Regulation and the Minimum Standards for Information from Pensionskassen to Beneficiaries ensure greater transparency in relation to occupational pensions.
Extended information requirements for Pensionskassen
With the amendment of the Information Requirements Regulation for Pensionskassen the FMA obliges Pensionskassen to provide information about what options exist for pay-out, once a beneficiary has reached the pensionable age determined in the pension company contract. In addition to this Regulation, the FMA has also updated its Minimum Standards on Information Requirements. The new developments relate to the information that beneficiaries (entitled) are required to receive both when being joining an occupational pension plan, as well as when leaving a company or prior to the occurrence of a benefit event. “Customers of Pensionskassen want to have transparency about what the effect might be of a change in their place of work regarding their pension claims, as well as what benefits they may expect when they retire. Transparency promotes confidence in the occupational pension provision system,” explain the FMA’s Executive Directors Helmut Ettl and Klaus Kumpfmüller.
The new requirements are based on the European Pension Funds Directive (IORP II), which has been transposed into Austrian law by the amendment to the Pensionskassen Act (PKG; Pensionskassengesetz) that entered into force at the end of November 2018.
Greater cost transparency for life insurance customers
To also further develop transparency and customer information in the third pillar of the Austrian pension system – that of individual pensions – the FMA already extended the information requirements for life insurance a few weeks ago. Since 1 October 2018 insurance policyholders are required to be informed about the amount of the total costs of their life insurance and the effects of these total costs on the insurance benefits they receive. Insurers are required to present in a standardised format prescribed by the FMA what proportion of paid-in premiums is invested and how high the expected proportion of costs is as a percentage of the paid-in premium sum or the performance of the investment.
There is now a standardised format for term life insurance products in the form of the LIPID (Life Insurance Product Information Document). Consequently insurance products are intended to be most easy to understand for insurance policyholders and also easier to compare with one another.
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