Bank of Russia strengthens protection of NPF clients: new version of basic standard
The document that the regulator has approved introduces a cooling-off period when non-governmental pension provision (NPP) agreements are concluded. Now, a client may, within 14 days, terminate an agreement concluded with a non-governmental pension fund (an NPF) through an agent. Previously, only some NPFs voluntarily applied such practices.
The list of data in the key information document (KID) that NPFs issue to clients before concluding an NPP agreement is expanded. This is primarily due to the introduction of government insurance for voluntary pension savings. Now, the KID should contain a section dedicated to the guarantee system in case an NPF’s licence is cancelled or an NPF goes bankrupt. Such section should specify the compensation amount and the payment procedure.
According to the law, an NPF should ensure that investments do not entail any losses. The KID will stipulate that an NPF is obliged to specify results of investing the client’s funds in the NPP pension account. If an NPF has incurred losses, it should replenish the client’s pension account with the relevant amount. Also, an NPF is not allowed to reduce the amount of the non-government pension and the time period during which the pension is paid in the event of a negative result of investing pension reserves.
The standard will become applicable 90 days after it is published on the Bank of Russia official website.