VAG-Info-Regulation published in BGBl
Last Thursday, 27 June 2019, in BGBl 2019 Part 1, No. 23, p. 871, the "Ordinance on Information Obligations in Occupational Retirement Provision, which is implemented by Pension Funds, Pensionskassen and other Life Insurance Companies (VAG-Informationspflichtenverordnung, VAG-InfoV)" was published.
There are a number of editorial improvements and also some clarifications regarding the content compared to the draft version (see in detail our Client Alert).
The concept of the pension system is explained in the explanatory memorandum to the VAG-InfoV (page 2): "In the simplest case, a pension system is a tariff that determines benefits and contributions (possibly collective financing contributions for the benefits). More generally, a pension scheme is a grouping of similar tariffs which the implementing institution implements essentially according to uniform principles. In particular, different tariff generations can also be bundled. The criteria used to group tariffs will depend on the individual case."
It is also made clear in the explanatory memorandum to the VAG-InfoV (page 4) that fluctuating profit participation does not represent an investment risk for a member: "The member bears an investment risk if, depending on the development of the investments, the pension capital achieved (without profit participation) or the entitlement to retirement benefits achieved (without profit participation) can also fall. The pension recipient bears an investment risk if, depending on the development of the investments, the pension benefits due (without profit participation) may also fall. The members and beneficiaries shall bear the investment risk entirely in the case of the pure defined contribution plan, in all other cases they shall bear it partially or not at all".
In contrast to the draft VAG-InfoV-E, the order of the information to be provided no longer needs to follow that of § 3 (1-3) VAG-InfoV (deletion of § 3 (4) VAG-InfoV-E).
It is clarified that contributions paid into the pension relationship in the past twelve months or over a longer period need only be disclosed for defined contribution plans, defined minimum benefit plans or pure defined contribution plans. This is to be welcomed, since in the case of pure benefit commitments such an indication does not normally represent any added value for the beneficiary (§ 4 Paragraph 1 No. 10). Furthermore, the breakdown of the contributions to be declared into payments from the sponsoring undertaking and from the scheme member (ibid.) does not apply.
As that was already the case in in § 8 VAG-InfoV-E, albeit with some linguistic revisions, the pension information must contain the projection for an elementary scenario as well as a projection for
- a yield scenario, or
- a best estimate scenario,
(also see this article).
It was added that the projections of the latter two scenarios can be omitted if no other values than in the elementary scenario result. The explanatory memorandum adds on page 9 "This is the case if the future entitlement is determined in euros by a scale of benefits".
The elementary scenario projects guaranteed benefits. Fortunately, the explanatory memorandum to the Act clarifies that "in this respect, the projections correspond to the performance data according to Section 155 (1) sentence 3 numbers 2 and 3 of the Insurance Contract Act. …“. For the elementary scenario, the value resulting from the contributions paid to date must also be projected; in the case of collective benefit commitments, this corresponds to the entitlement acquired up to the cut-off date with the exception of any final profit participation.
It is to be welcomed that the VAG-InfoV now explicitly permits the inclusion of further projections in pension information.