Commission Delegated Regulation (EU) 2021/473 CHAPTER II — CONTENT AND PRESENTATION OF THE PEPP KID

Article 3–Article 6 · 4 articles

Compiled from an official source version. Later amendments or repeals may not be reflected; the official text prevails. · Read the official text ↗

Section titled ‘What is this product?’

Article 3

1. Information stating the long-term retirement objectives of the PEPP and the means for achieving those objectives in the section titled ‘What is this product?’ of the PEPP KID shall be summarised in a brief, clear and easily understandable manner. That information shall identify the main factors upon which investment return and pension outcomes depend, the underlying investment assets or reference values and how the return is determined, as well as the impact of contribution levels and the expected savings period until retirement. The principles of the applied risk-mitigation techniques, in particular the allocation of returns within a portfolio to the individual PEPP contract, shall be explained. It shall also refer to the type of the PEPP provider and to the resulting specific features of the PEPP contract. 2. The description of the type of PEPP savers to whom the PEPP is intended to be marketed in the section titled ‘What is this product?’ of the PEPP KID shall include information on the target PEPP savers identified by the PEPP provider. The determination of the type of PEPP savers to whom the PEPP is intended shall be based upon the ability of PEPP savers to bear investment loss and their investment horizon preferences, their theoretical knowledge of, and past experience with PEPPs and the financial markets in general, as well as the needs, characteristics and objectives of potential PEPP savers. 3. The details of PEPP retirement benefits in the section titled ‘What is this product?’ of the PEPP KID shall include in a general summary the key features of the PEPP contract. Those details shall in particular include the following: (a) possible forms of out-payments as referred to in Article 58(1) of Regulation (EU) 2019/1238, and the right to modify the form of out-payments as referred to in Article 59(1) of that Regulation; (b) a specification of each PEPP retirement benefit included, with an explanatory statement indicating that the value of those benefits is shown in the section titled ‘What are the risks and what I could get in return?’. 4. Where the PEPP contract covers biometric risk, information shall be included in the section titled ‘What is this product?’ of the PEPP KID on details of that coverage, including a list of risks covered and the circumstances that would trigger the cover and the insurance benefits. The biometric risk premium, as described in point 54 of Annex VI to Regulation (EU) 2017/653, shall be presented in percentage terms of the annual contribution or in the form of the impact of the biometric risk premium on the investment return at the end of the accumulation phase, based on the generic holding periods used for the projected PEPP benefits. Where the premium is paid in the form of a single lump sum, the details shall include the amount invested. Where the premium is paid periodically, the number of periodic payments and an estimation of the average biometric risk premium as a percentage of the annual contribution shall be included in the information. 5. The section titled ‘What is this product?’ of the PEPP KID shall include the following information on the portability service: (a) information that PEPP savers have, upon request, the right to use a portability service referred to in Article 17(1) of Regulation (EU) 2019/1238; (b) information on which sub-accounts are immediately available; (c) a reference to the EIOPA central public register referred to in Article 13 of Regulation (EU) 2019/1238, where information for the conditions for the accumulation phase and the decumulation phase of the national sub-accounts determined by Member States are contained; (d) information on the choice provided for in Article 20(5) of Regulation (EU) 2019/1238 where the PEPP provider is not able to ensure the opening of a new sub-account corresponding to the PEPP saver’s new Member State of residence. 6. The section titled ‘What is this product?’ of the PEPP KID shall include information on the provision of the switching service, and in particular, information about switching possibilities provided for in Article 52(3) of Regulation (EU) 2019/1238. If the PEPP provider, in accordance with that Article, allows the PEPP saver to switch PEPP provider more frequently, the frequency shall be indicated in the PEPP KID. The PEPP KID shall specify whether the switching is free of charge. Where it is not free of charge, the PEPP KID shall disclose the associated costs. The information on the provision of the switching service shall also include information about the right to receive additional information about the switching service as referred to in Article 56(2) of Regulation (EU) 2019/1238. This information shall be made available on the PEPP provider’s website and upon request by PEPP savers in accordance with Article 24 of Regulation (EU) 2019/1238. 7. The section titled ‘What is this product?’ of the PEPP KID shall include information on the conditions for modification of the chosen investment option. In particular, where relevant, information on any alternative investment options offered that the PEPP saver can switch to in accordance with Article 44 of Regulation (EU) 2019/1238. If the PEPP provider allows the PEPP saver to modify the chosen investment option more frequently than the minimum requirement, the frequency of possible modification shall be indicated and the disclosure shall specify that this modification is free of charge or disclose the associated costs. 8. The information related to the performance of the PEPP provider’s investments in terms of environmental, social and governance factors (‘ESG factors’) in the section titled ‘What is this product?’ of the PEPP KID shall include narrative explanations and quantitative information, where available, on how the integration of ESG factors affects the actual and expected performance of the PEPP provider’s investments. 9. The section titled ‘What is this product?’ of the PEPP KID shall include information, where applicable, on whether there is a cooling-off period or cancellation period for the PEPP saver, and the consequences thereof, including all applicable fees and penalties for using the cooling-off period or cancelling the contract. 10. The information in the section entitled ‘What is this product?’ of the PEPP KID shall include a reference to the information on past performance of the PEPP’s investment options, as allocated to the PEPP savers. The information on past performance shall be made available on the PEPP provider’s website. 11. Where information is presented in an electronic format with layering of information, the first layer shall contain at least the following information: (a) information referred to in paragraphs 1, 2 and 3; (b) information on whether the PEPP contract covers biometric risk; (c) information on either of the following: (i) whether the Basic PEPP provides a guarantee on the capital or takes the form of a risk-mitigation technique consistent with the objective to allow the PEPP saver to recoup the capital; (ii) whether and to what extent any alternative investment option, if applicable, provides a guarantee or a risk- mitigation technique. Other information may be provided in the additional layers of detail.

Section titled ‘What are the risks and what could I get in return?’

Article 4

1. The information on the risk-reward profile of a PEPP, including the narrative explanations of the summary risk indicator in the section titled ‘What are the risks and what could I get in return?’ of the PEPP KID, shall be provided in a brief, clear and easily understandable manner. The information shall explain the objective and the results of the summary risk indicator to identify, in a standardised and comparable manner, different risk and reward profiles and that the summary risk indicator shall be regarded as a reference point when comparing different PEPPs’ risk-reward profiles. The PEPP provider shall clearly state that the PEPP summary risk indicator is different from and not comparable with the summary risk indicator of products falling under Regulation (EU) No 1286/2014 of the European Parliament and of the Council ( 4 ) . The information shall explain that a low risk-reward profile implies that the PEPP saver is more likely to receive a moderate retirement income, whilst a high risk-reward profile implies that the PEPP saver is more likely to receive a relatively higher or lower retirement income than lower risk-reward profiles. Narrative explanations shall identify the limitations of the summary risk indicator, including where relevant, the dependence of the risk-reward profile on the actual development of the investments, the saving period and the effectiveness of the applied risk-mitigation technique. 2. The required information, according to point (ii) of Article 28(3)(d) of Regulation (EU) 2019/1238 of the possible maximum loss of the invested capital in the section titled ‘What are the risks and what could I get in return?’, of the PEPP KID shall be complemented by information on the standardised, stochastically determined, accumulated capital at decumulation under a stressed scenario, equal to the fifth percentile of the distribution. 3. In the section titled ‘What are the risks and what could I get in return?’ of the PEPP KID, information on the standardised performance scenarios of favourable, best estimate and unfavourable, shall be presented in relation to the projected PEPP retirement benefits based on the following elements: (a) the projections shall include four generic PEPP savers with 40, 30, 20 and 10 years until the end of the accumulation phase and be based on a standardised contribution level; (b) the favourable scenario shall refer to the 85th percentile of the distribution, the best estimate scenario to the median and the unfavourable scenario to the 15th percentile of the distribution; (c) the projected accumulated capital at the end of the accumulation period and the projected monthly retirement benefits shall be adjusted for the effects of inflation; (d) the information shall contain narrative explanation, including nominal amounts, of the translation in today’s values due to the changes in purchasing powers over time. 4. Where applicable, the information on the conditions for returns to PEPP savers or built-in performance caps in the section titled ‘What is this product?’ of the PEPP KID shall make reference to the design and the allocation mechanisms of the applied risk-mitigation techniques. 5. The inputs, assumptions and methodologies for the information referred to in paragraphs 1, 2 and 3 shall be in line with Annex III. 6. Where information is presented in an electronic format with layering of information, the first layer shall contain at least the summary risk indicator and the projected PEPP retirement benefits of four generic PEPP savers, whereas the nominal projected benefits may be provided in the additional layers of detail. Other information may be provided in the additional layers of detail.

Section titled ‘What are the costs?’

Article 5

1. The information in the section titled ‘What are the costs?’ of the PEPP KID shall be provided in a brief, clear and easily understandable manner. Any costs and fees identified in the section ‘What are the costs?’ shall refer to actual incurred costs, incurred directly at the level of the provider or at the level of an outsourced activity or investment fund, including all related overhead costs. If applicable, costs and fees charged to the prospective PEPP saver, before saving in the PEPP, shall be separately disclosed as ‘initial costs’. Costs and fees, both one-off and recurring, shall be presented as ‘total costs per annum’ in monetary terms and as a percentage of the accumulated capital, as defined by Article 2(24) of Regulation (EU) 2019/1238. The compound effect of the costs shall be presented based on a standardised monthly contribution by the PEPP saver in monetary terms, as specified in Part III of Annex III to this Regulation. 2. The section titled ‘What are the costs?’ of the PEPP KID shall contain the following information: (a) information on the administrative costs arising from the PEPP provider’s activities when administering PEPP accounts, collecting contributions, providing information to members and executing payments; (b) information on the following investment costs: (i) costs of safekeeping of assets, including fees paid to the custodian for keeping assets safe and collecting dividends and interest income; (ii) portfolio transaction costs, including actual payments by the PEPP provider to third parties to meet costs incurred in connection with the acquisition or disposal of any asset in the PEPP account; (iii) other costs relating to the management of the investments; (c) information on the distribution costs arising from marketing and selling the PEPP product, including the costs and fees related to providing advice; (d) information on costs of guarantees charged to the PEPP saver for the financial guarantee to pay back at least the accumulated capital at decumulation and of any other financial guarantee provided under the PEPP contract. 3. Where a PEPP provider charges fees to recoup the incurred costs for initial advice during the initial term of the PEPP contract, before the PEPP saver has the right to switch the PEPP provider according to Article 52(3) of Regulation (EU) 2019/1238, the PEPP provider shall inform prospective PEPP savers about the total amount of those fees, the time period during which, and the frequency with which, such fees shall apply. 4. Where information is presented in an electronic format with layering of information, the first layer shall contain at least the following information: (a) the information on total costs per annum in monetary terms and as a percentage of the accumulated capital at the end of the year, as specified in paragraph 1; (b) if applicable, information on any initial costs. Other information may be provided in the additional layers of detail.

Standard layout of the PEPP KID

Article 6

PEPP providers shall present the PEPP KID in accordance with Annex I. Where information is presented in an electronic format, the presentation by means of the template set out in that Annex may only be adapted to allow for layering of information.

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