The German financial supervisory authority, BaFin, has released further guidelines for occupational pension schemes to improve their own risk assessment reports, which that are so far not in line with the requirements set by the regulator.

IORPs are not meeting the minimum requirements specified in the circular 09/2020 (VA), that provides information on the interpretation of regulations on own risk assessment (ERB) according to paragraph 234d of the Insurance Supervision Act (VAG).

The ERB circular recommends occupational schemes to structure risk assessment reports in detail, clearly addressing requirements, with quantitative information, specific figures and development over time.

This applies above all to information on financing requirements, according to BaFin. The regulator has now given further, specific tips to address the issue on the lack of detailed information provided by occupational pension schemes.

According to BaFin, occupational schemes should ideally provide the necessary quantitative information in a clear form in risk assessment reports for at least four aspects relating to financing requirements in tabular form, in order to specify the relevant figures for each year, or a shorter timeframe. IORPs should anticipate and assess the risks.

The regulator also underlined in a note that occupational schemes have misinterpreted part of the ERB circular, believing that it defines the “entire financing requirement” within the meaning of paragraph 234d (2) sentence 1 no. 4 of the VAG.

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