Launch of the IOPS Good Practices for designing, presenting and supervising pension projections


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 Date published 22 March 2022 


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22/03/2022 - The IOPS Good Practices for designing, presenting and supervising pension projection are intended to aid pension supervisory authorities, and to highlight the importance of transparency in forecasting and clear and simple communication. Adequate projections can play a key role for supporting pension sustainability, especially for defined contribution pension schemes and plans.

Pension projections can be a powerful tool to manage expectations of pension plan members and influence their retirement decisions (e.g. the chosen contribution rate, length of saving time, level of risk). Projections can educate members about likely values of their future retirement income and the effects of retirement decisions taken. However, pension projections may also pose several risks that relate to improper methodology and assumptions or improper communication.

Issues related to forecasting and communicating future retirement benefits span across pension policymaking and supervision with different regulatory and supervisory frameworks. In some jurisdictions, pension supervisors have the explicit mandate to supervise, and sometimes standardise, various stages of projection activities by pension plans, providers or funds, i.e. their design (methodology, assumptions), delivery modes (traditional and electronic), disclosure of information, as well as ways the results are presented and explained to the pension plan members.

The 2018 IOPS Good Practices on the Role of Pension Supervisory Authorities in Consumer Protection Related to Private Pension Systems encourage the provision of meaningful pension projections, preferably containing the retirement income coming from both public and private pension schemes, and emphasise the role of pension supervisory authorities in identifying the best way and format to convey pension projections to members and ensuring that clear rules for pension projections are in place. Moreover, pension projections should not be an isolated topic; there is a need for an overall strategy for the promotion of financial literacy in which pension projections can be integrated.

These good practices relate to projections from various funded pension arrangements with a particular focus on defined contribution (DC) pension plans/schemes and aim to outline and provide suggestions on the most important issues from the perspective of pension supervisors. They are voluntary in nature. Where the language used in the good practices tends to be directive (such as the word “should”), it is to be interpreted as an encouragement to pension supervisory authorities2 to voluntarily adopt and implement them.

Since these good practices only serve as a benchmark reference for all jurisdictions, the question of how to best apply them in practice should take into account specific conditions and circumstances of each jurisdiction.

Launch agenda

Press release English | Espanol





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