NPFs to disclose conditions of pension agreements to customers before signing
Non-governmental pension funds will be obliged to provide clear and easy-to-understand information regarding all main specifics and risks in the key information document — the passport of a financial product. Customers should receive it before signing an agreement.
This is required by the Basic Standard for Protecting the Rights of Non-governmental Pension Funds’ Customers approved by the Bank of Russia.
The new requirements will be applicable to agreements on both compulsory pension insurance (CPI) and non-governmental pension schemes (NPS). They will not cover depositors and participants in early retirement pension and corporate non-governmental pension plans.
The Standard sets requirements for the conditions of NPFs’ agreements with agents so as to prevent unfair practices in their work. Specifically, according to the agreement, agents may only receive the fee provided they have fulfilled their obligations properly, e.g. after funds verify information about customers. Currently, agents are authorised to provide support under CPI and NPS agreements, execute NPS agreements, and ensure the transfer of pension contributions to funds (in 2020, the authorities adopted a law prohibiting agents to conclude CPI agreements). Agreements shall also contain the terms on agents’ liability, and funds will control how agents perform their obligations.
Furthermore, the Basic Standard stipulates the rules for NPFs’ communication with customers, including the procedure and deadlines for handling requests. This document was drafted by the self-regulatory organisations National Association of Non-State Pension Funds and Association of Non-State Pension Funds ‘Alliance of Pension Funds’. All funds shall be compliant with the new Standard. The majority of the provisions stipulated in the Standard become effective 90 days after its publication on the Bank of Russia website.