Commission Delegated Regulation (EU) 2021/473 of 18 December 2020 supplementing Regulation (EU) 2019/1238 of the European Parliament and of the Council with regard to regulatory technical standards specifying the requirements on information documents, on the costs and fees included in the cost cap and on risk-mitigation techniques for the pan-European Personal Pension Product (Text with EEA relevance)
Commission Delegated Regulation (EU) 2021/473of 18 December 2020supplementing Regulation (EU) 2019/1238 of the European Parliament and of the Council with regard to regulatory technical standards specifying the requirements on information documents, on the costs and fees included in the cost cap and on risk-mitigation techniques for the pan-European Personal Pension Product(Text with EEA relevance)THE EUROPEAN COMMISSION,Having regard to the Treaty on the Functioning of the European Union,Having regard to Regulation (EU) 2019/1238 of the European Parliament and of the Council of 20 June 2019 on a pan-European Personal Pension Product (PEPP)OJ L 198, 25.7.2019, p. 1., and in particular Article 28(5), fourth subparagraph, Article 30(2), third subparagraph, Article 33(3), third subparagraph, Article 36(2), second subparagraph, Article 37(2), third subparagraph, Article 45(3), third subparagraph, and Article 46(3), third subparagraph, thereof,Whereas:(1)Regulation (EU) 2019/1238 lays down uniform rules on the registration, manufacturing, distribution and supervision of personal pension products that are distributed in the Union under the designation pan-European Personal Pension Product (PEPP).(2)The PEPP information documents are crucial components of the PEPP framework. Those documents allow for relevant information to be provided to consumers in a way that facilitates understanding and comparability of the PEPPs and of different investment options.(3)To achieve comparability of PEPPs and packaged retail investment and insurance products (PRIIPs), the information requirements, where appropriate and relevant, should be aligned with Commission Delegated Regulation (EU) 2017/653Commission Delegated Regulation (EU) 2017/653 of 8 March 2017 supplementing Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurance-based investment products (PRIIPs) by laying down regulatory technical standards with regard to the presentation, content, review and revision of key information documents and the conditions for fulfilling the requirement to provide such documents (OJ L 100, 12.4.2017, p. 1). concerning the key information document for PRIIPs. In a few areas, it is necessary to tailor the requirements to a long-term pension savings product, which can be kept throughout an individual’s career and life, with a particular focus on pension-specific risks, such as inflation and risks to maintaining contributions.(4)Given that online distribution is an important feature of PEPPs, it is particularly critical that consumers can easily access, understand and use the information presented in a digital environment. The design of the information documents should, therefore, be further developed to present the information in an effective and transparent way when provided using digital means such as website, mobile application, audio or video. Those designs should facilitate provision of information by digital means in an appealing and comprehensible way. Layering of information should ensure sufficient flexibility in adapting the presentation to different types of digital means and to the evolving digital environment.(5)To provide consumers with key information of the PEPP that is easy to read and to understand, and to allow for comparability between PEPPs, it is necessary to have a high degree of standardisation. It is therefore necessary to establish mandatory templates for the information documents. To facilitate consumers’ understanding of the PEPP as a long-term retirement savings product, the information requirements should be tailored to the pension objective of the PEPP, to deliver decision-useful information in an attractive and clear way for the potential PEPP saver and at the same time enabling the use of digital means of distribution of the information by the PEPP provider.(6)The classification of the risk-rewards profiles and the "summary risk indicator" of the PEPP should follow the identified pension-specific risks and the objective to reach appropriate and stable retirement income. The design of the summary risk indicator should provide for a consistent and comparable risk categorisation and should be complemented by consistently derived supplementary information to distinguish "superior" investment strategies and risk mitigation techniques from "inferior" ones in order to provide consumers with relevant information about whether a riskier investment option indeed provides for the potential of relatively higher rewards.(7)Projections of future retirement income are important to the consumers’ understanding of the PEPP and its suitability for the individual retirement objectives. The PEPP key information document (KID) should therefore display the results of the inflation-adjusted retirement outcomes of generic PEPP savers with defined accumulation periods and standardised contributions.(8)Key indicators for risks and costs should be designed to be applied to different potential PEPP investment options in a coherent and consistent manner. The disclosure of costs should focus on tangible, monetary amounts and should ensure comparability to the Basic PEPP’s capped level of cost and fees.(9)A template is necessary for the PEPP KID. That template should be easily understandable and focus on information that is useful for consumers when taking decisions on saving in a PEPP and mitigate any potential behavioural biases.(10)In accordance with Article 26(2) of Regulation (EU) 2019/1238 PEPP providers are to ensure that PEPP KIDs are accurate, fair, clear and not misleading, at all times, so that the prospective PEPP saver is able to rely on the standardised information contained in the document when deciding on the long-term savings for retirement. Rules should therefore be laid down to ensure regular and appropriate review of the PEPP KID and, where necessary, timely revision of the PEPP KID.(11)Taking a decision on long-term savings for retirement is challenging, as future retirement needs may not be fully known and personal circumstances and careers may change. Therefore, even if the PEPP KID is designed to provide information useful for taking decision on saving in a PEPP in a comprehensible and reliable way, the prospective PEPP savers should have sufficient time – taking into account their needs, experience and knowledge – to understand and consider the relevant information before taking a decision on whether to save in a particular PEPP.(12)The PEPP Benefit Statement should be presented in a way that enables the PEPP savers to easily track and monitor the development of own PEPP savings. Whilst the PEPP Benefit Statement is by its nature personalised, it should be consistent with pre-contractual information and should allow for constant comparison amongst PEPPs in order to enable the PEPP savers to take informed decisions on changing the investment option, switching PEPP provider or adapting the contribution levels to achieve the PEPP saver’s retirement objective.(13)In order to ensure the cost-efficiency of the Basic PEPP it is necessary to ensure that all costs and fees are included in the cost cap, except where it is necessary to ensure that Basic PEPPs that provide the additional product feature of the capital guarantee are not disadvantaged compared to Basic PEPPs which do not offer that product feature so as to ensure a level playing field.(14)The PEPP’s risk-mitigation techniques are essential to foster appropriate investment strategies that are capable of achieving better pension benefit outcomes. For this purpose, clear and enforceable criteria are needed to enable the assessment of the effectiveness of the chosen risk-mitigation technique in a consistent way. Those criteria should therefore apply to the three main types of risk-mitigation techniques of life-cycling, setting reserves and guarantees, and take into account the specificities of those types. Those criteria should also apply to any new, innovative risk-mitigation technique in order to foster better retirement outcomes through innovation.(15)The long-term nature and the retirement income objective of the PEPPs require stochastic modelling which is a tool to forecast the probability of various outcomes under different conditions, so as to project future PEPP benefits in a reasonable manner. It is therefore necessary to ensure that stochastic modelling is used when assessing the risk profile and the potential performance of the investment strategies offered by PEPP providers, reproducing the range of possible PEPP benefit outcomes that could be observed in real life due to uncertain asset returns and contribution levels. Stochastic modelling should also be used when determining the appropriate levels of ambition in terms of risks, when building the performance scenarios for the PEPP KID and the pension benefit projections for the PEPP Benefit Statement as well when implementing the methodology for the summary risk indicator effectively. For this purpose, it is appropriate to establish certain references for the stochastic modelling to be used by the PEPP provider. The PEPP provider should remain free to adapt the stochastic modelling to reach the required objective and to integrate the models elaborated by the PEPP providers for other, similar products.(16)The provisions of this Regulation are closely linked. They deal with requirements concerning the information documents, the costs and fees for the Basic PEPP, as well as the risk-mitigation techniques. Due to substantive interlinkages between provisions in this Regulation and to enhance the consistency between different regulatory areas covered by this Regulation, it is appropriate to further specify the rules in those areas in a comprehensive and holistic manner. This is necessary in order to ensure a high level of consistency between the rules on high-quality product features and rules on the effective communication of those features to consumers. The rules for specific product features of the PEPP are necessary in order to achieve a holistic assessment of the balance of risks and rewards for the PEPP saver, whilst ensuring better pension outcomes through innovation and cost efficiencies through digitalisation. It is important to communicate these innovative approaches to consumers in a consistent and comparable way. To ensure coherence between the provisions, they should be included in a single Regulation.(17)This Regulation is based on the draft regulatory technical standards submitted to the Commission by the European Insurance and Occupational Pensions Authority (EIOPA).(18)EIOPA has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the advice of the Insurance and Reinsurance Stakeholder Group and the Occupational Pension Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1094/2010 of the European Parliament and of the CouncilRegulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC (OJ L 331, 15.12.2010, p. 48).,HAS ADOPTED THIS REGULATION: