21-07-2021

New regulations on employment pension funds

RD 738/2020 has been published in the BOE, effective 8-8-2020, which modifies the Regulation of pension plans and funds and RD 1060/2015, of organization, supervision and solvency of the insurance and reinsurance entities, in order to improve the supervision, transparency and information of the occupational pension funds.

This Royal Decree completes the transposition into Spanish law of the following European directives:

1. Directive 2016/2341, relating to the activities and supervision of occupational pension funds, which was incorporated into the Spanish legal system in its most outstanding aspects through RDL 3/2020. The approved standard now incorporates the following new features:

a) Regulates the right to information of the participants and beneficiaries of pension plans and the governance system of the occupational pension funds, with the aim of guaranteeing proper risk management and protecting the savings of the participants.

b) Increases the protection of the rights of participants in pension plans.

c) It broadens the knowledge of the investors about the risks they assume.

d) Increases information on the cost of managing the fund and what they can expect to receive upon retirement. For this purpose, the declaration of the pension benefit is included, a document with at least annual frequency that must inform the saver about the pension that he will foreseeably receive from his pension fund at the time of retirement. The document must include:

– information regarding the assumptions used to calculate the pension estimates;

– the foreseeable amount in favorable and unfavorable scenarios;

– the pension collection options.

2. Directive 2017/828, on the promotion of long-term involvement of shareholders. The approved regulation establishes the information obligations for pension funds on their long-term investment strategy in companies whose shares are admitted to trading on a regulated market.

Progress is also being made in the transposition of Directive 2019/2177, which modifies the Solvency II Directive on access to insurance and reinsurance activity, in a specific aspect referred to the volatility adjustment in the calculation of technical provisions of insurers .

To introduce the aforementioned changes in the internal regulations, the approved regulation modifies the Regulation of pension plans and funds (RD 304/2004) and RD 1060/2015, on the organization, supervision and solvency of insurance and reinsurance entities.

Royal Decree 738/2020, of August 4, which modifies Royal Decree 304/2004, of February 20, which approves the Regulation of pension plans and funds, and Royal Decree 1060/2015, of November 20, on the organization, supervision and solvency of insurance and reinsurance entities.