EIOPA CALLS FOR A NEW APPROACH TO INFORMATION DISCLOSURE FOR DEFINED CONTRIBUTION SCHEMES

The European Insurance and Occupational Pensions Authority (EIOPA) has
published today its Report on Good Practices related to the provision of
information for Defined Contribution (DC) schemes. The Report is part of
EIOPA own-initiative work. It is addressed to policymakers responsible
for information disclosure to pension scheme members.

In its study EIOPA calls for a new approach to information disclosure in
the context of the changes being made to pension systems throughout the
EU. EIOPA believes that there is a growing need to support people to make
effective financial decisions in their retirement planning by providing
information focused on behavioural purposes. 'Just providing
"sufficient" legally and technically relevant information has proven
not to be effective, and can even be counter-productive', as stated in
the Report.

EIOPA explains that people are usually not homo economicus: they try to
reduce complexity, use rules of thumb, are prone to bias when making
decisions, are unrealistically optimistic, let short term interests
prevail over the long-term and have limited self-control to save for
later. The study argues that in order to be effective, information needs
to take these human characteristics into account.

The Report contains a checklist based on insights from behavioural
economics and communication science about how people process information,
and presents examples of good practices for providing information that are
already in place in various Member States.

The Report also makes an important point that providing effective
information alone, is not a panacea. It should be used in combination
with other tools, such as financial education, default investment funds
and possible mandatory approaches.

Click here to view the Q&A of Gabriel Bernardino, Chairman of EIOPA, on the
main conclusions of the Report. (Link:
https://eiopa.europa.eu/fileadmin/tx_dam/files/pressreleases/Quiz_of_GB_about_the_Report.pdf
)

Click here to view the Report on Good Practices related to the provision of
information for Defined Contribution (DC) schemes. (Link:
https://eiopa.europa.eu/publications/reports/index.html )


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