What is Act No. 165 / 2019 Coll.?

Act No. 165 / 2019 Coll., amending Act No. 340 / 2006 Coll., on the Activities of Occupational Pensions Institutions, as amended — Act amending Act No. 340 / 2006 Coll., on the Activities of Occupational Pensions Institutions, as amended.

When it became Act No. 165 / 2019 Coll. effectiveness?

Act No. 165 / 2019 Coll. became effective 01.07.2019.

Is Act No. 165 / 2019 Coll. still valid?

Yes, Act No. 165 / 2019 Coll. is still valid and effective.

How many times was it Act No. 165 / 2019 Coll. amended?

Act No. 165 / 2019 Coll. has 2 time versions of the text.

Act No. 165 / 2019 Coll. - Act amending Act No. 340 / 2006 Coll., o...

165

THE LAW

of 12 June 2019

amending Act No. 340 / 2006 Coll., on the Activities of Occupational Pensions Institutions, as amended

Parliament has decided on this law of the Czech Republic:

Čl. I

Act No. 340 / 2006 Coll., on the Activities of Occupational Pensions Institutions, as amended by Act No. 248 / 2008 Coll., Act No. 281 / 2009 Coll., Act No. 260 / 2011 Coll., Act No. 241 / 2013 Coll., Act No. 336 / 2014 Coll., Act No. 205 / 2015 Coll., Act No. 304 / 2016 Coll., Act No. 183 / 2017 Coll. and Act No. 180 / 2018 Coll., are amended as follows:

1. In footnote 1, the first sentence is replaced by "Directive (EU) 2016 / 2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORP) (recast) '.

2. In Article 2, at the end of point (u), the dot is replaced by a comma and the following points (v) to (z) are added:

"(v) a potential participant in a person eligible to participate in a pension plan;

(w) the transferring institution of the institution which transfers liabilities, technical provisions and other rights and obligations as well as the corresponding assets or monetary equivalent resulting from the pension plan or part thereof to an institution authorised in another Member State;

(x) the receiving institution of an institution which accepts liabilities, technical provisions and other rights and obligations, as well as the corresponding assets or their monetary equivalent, resulting from a pension plan or part thereof from an institution authorised in another Member State;

(y) a durable medium of data an instrument which allows a participant or recipient to store information intended for him personally so that it can be used for a reasonable period of time for the purpose of such information and which allows the reproduction of that information in its unchanged form;

(z) cross-border activities in which the relationship between the contributor and participants and beneficiaries is governed by social and occupational legislation in the field of occupational retirement provision of a Member State other than the home Member State. "

3. in § 4 (a) of the introductory part of the provision, the words "2 months" are replaced by the words "6 weeks."

4. in Article 4 (d), the words "and the Commission of the European Communities' are replaced by the words", by the European Insurance and Occupational Pensions Authority and by the European Commission ';

5. In Article 6, the following paragraph 5 is added:

"(5) The institution shall publish on its website general information on the pension plan, including in particular information on the conditions referred to in paragraph 2 and information referred to in Article 7 (3)."

6. Paragraph 7 (3) reads as follows:

"(3) The institution is required to provide the participants and beneficiaries with information each year on:

(a) the institution, specifying the Member State in which it is authorised, its financial situation and the name of the competent supervisory authority;

(b) the rights and obligations of the parties involved in the pension plan;

(c) the investment profile and, where appropriate, the options for selecting from several available investment profiles and the rules for including a participant in those profiles;

(d) the nature of the financial risks borne by the participants and beneficiaries;

(e) the conditions relating to guarantees under the pension scheme or certain amount of benefits, or that no guarantee is provided under the pension scheme;

(f) how the pension rights acquired are protected and how the benefits are reduced, if applicable;

(g) the current performance of the investments related to the pension plan for a period of at least 5 calendar years immediately preceding the calendar year in which the institution provides the information, or for the period from the date of the pension plan, if that period is less than 5 years if the participants bear the investment risk or may take investment decisions;

(h) the structure of costs incurred by participants and beneficiaries in connection with pension plans which do not provide a certain amount of benefits;

(i) the possibilities for participants and beneficiaries to receive pension benefits;

(j) additional information for participants entitled to the transfer of pension rights relating to the arrangements for such transfer. "

7. In Article 7 (5), the dot is replaced by a comma at the end of point (b) and the following point (c) is inserted:

"(c) inform them of the assumptions used to create the projections referred to in Section 7b (3) (g).";

8. In Article 7, the sentence "The institution is required to inform the participant in due time before reaching its retirement age laid down by law or pension plan on the possibility of paying pension benefits is inserted at the beginning of paragraph 6. '

9. In Article 7, paragraphs 7 and 8 are added:

"(7) Where an institution adopts a decision which leads to a reduction in the pension benefits due, it shall inform the beneficiary thereof without delay after the decision has been taken, but no later than 3 months before the date of implementation of this Decision.

(8) Where the beneficiary carries an investment risk during the period of payment of the pension benefits, the institution shall provide it with appropriate information on a regular basis. ';

10. The following Sections 7b to 7d are inserted after Section 7a, including the headings:

„§ 7b

Overview of pension benefits

(1) An institution shall draw up an overview of the pension benefits which, for the purposes of this Act, shall mean a document containing key information for the participant. When drawing up an overview of pension benefits, the institution shall take into account the specific nature of national pension schemes and relevant national social, labour and tax legislation.

(2) The institution shall provide the participant with an overview of the pension benefits at least once a year. Where the institution provides an overview of pension benefits in electronic form, it shall also provide it to the participant in paper form if the participant so requests.

(3) An overview of pension benefits shall include at least:

(a) the words "Overview of pension benefits" appearing as the title of the document;

(b) the date to which the information contained in the list of pension benefits relates; that date shall be indicated more significantly than other information provided in the list of pension benefits;

(c) the participant's identification data, including a clear indication of the legal retirement age, the retirement age specified in the pension plan or the estimated institution, or the retirement age designated by the participant;

(d) the name and contact address of the institution;

(e) the designation of the participant's pension plan;

(f) where applicable, information on full or partial guarantees under the pension scheme and where additional information may be obtained,

(g) information on the design of pension benefits, depending on the retirement age referred to in (c), and a statement that such projections may differ from the final value of the benefits paid; where the projections of pension benefits are based on economic scenarios, this information shall also include an estimate of the best scenario and adverse scenario taking into account the specific nature of the pension plan;

(h) information on the claims or accumulated capital acquired, taking into account the specific nature of the pension plan;

(i) information on contributions made to the pension scheme by the contributor and participant, at least during the last 12 calendar months preceding the date referred to in point (b), taking into account the specific nature of the pension plan;

(j) a breakdown of the costs deducted by the institutions over at least the last 12 months;

(k) information on the overall level of financing of the pension plan.

(4) An overview of pension benefits shall also indicate where and how additional information can be obtained, including:

(a) other practical information on the options offered to the participant under the pension plan;

(b) information on the annual accounts, annual reports and declarations on the principles of investment policy;

(c) information on the assumptions used for the amounts expressed as annuity, in particular as regards the rate of annuity, the type of provider and duration of the annuity, where applicable;

(d) information on the amount of benefits in the event of termination of employment or self-employment;

(e) information that a participant is assigned an investment option according to the rules specified in the pension plan, if applicable.

(5) The institution will take into account information on inflation developments published by the Czech National Bank when drawing up the pension schemes.

(6) Any substantial change in the information contained in the list of pension benefits compared with the previous year shall be clearly indicated.

§ 7c

Information to be provided to potential participants

(1) If potential participants are not included in the pension plan automatically, the institution shall provide them with information on:

(a) the options available to them, including investment options;

(b) the content of the pension plan, including the type of benefits;

(c) whether and how the investment approach takes into account environmental, climate, social and governance factors;

(d) the place where additional information may be obtained.

(2) Where potential participants are included in the pension plan automatically, the institution shall provide them with the information referred to in paragraph 1 immediately after becoming participants. In the event that the person entitled to distribute insurance is active in the automatic classification process, he shall immediately provide information on his person under the law governing the distribution of insurance and reinsurance.

(3) Where participants are not in a position to undertake investment risk or to take investment decisions, the institution shall provide potential participants with information on the past performance of the investments related to the pension plan for a period of at least 5 calendar years immediately preceding the calendar year in which the institution submits the information or for a period since the establishment of the pension plan, if that period is less than 5 years, and on the cost structure of the participants and beneficiaries.

§ 7d

Common provisions on the provision of information

The information referred to in § 7 to 7c shall be provided free of charge in electronic form on a durable medium or via a website, in the Czech language, in a clear, concise and understandable manner and shall be up to date and easily legible with uniform terminology and content, shall not be misleading or misleading and shall not contain jargon or technical terms, if normal words are used instead. They shall be provided free of charge in paper form upon request. ';

11. in Article 9 (2) (e):

"(e) fails to comply with any of the obligations relating to the provision of information under Sections 7 to 7d;"

12. in Article 9 (2), points (f) to (l) are deleted;

Point (m) shall be renumbered as point (f).

13. in Article 9 (3) (a), "(m)" is replaced by "(f)";

14. in Article 9 (3) (b), the words "(f), (g), (h), (i), (j), (k) or (l)" shall be deleted;

15. in Paragraph 10a (3):

"(3) Institutions based in the Czech Republic will ensure that the persons who actually manage it and those who perform key functions in it are credible and competent. A person shall be considered eligible if he has the appropriate professional qualifications, knowledge and experience to enable him or her to properly manage an institution or perform a key function. A person whose current activities give the presumption of sound management of an institution or the performance of key functions shall be considered to be credible. In the case of persons who actually run an institution based in the Czech Republic, it is sufficient that they have collectively adequate qualifications, knowledge and experience to ensure the prudent management of an institution based in the Czech Republic."

16. in Paragraph 10a (6) of the introductory part of the provision, the words "publish on their website" shall be inserted after the word "prepare."

17. in Paragraph 10a, at the end of paragraph 6, the dot is replaced by a comma and the following point (d) is added:

"(d) the ways in which investment policy takes account of environmental, social and governance factors."

18. After Paragraph 10a, the following Sections 10aa to 10aj are inserted:

„§ 10aa

Management, management and control of assets

(1) An institution established in the Czech Republic shall put in place appropriate measures to prevent and manage conflicts of interest in the performance of obligations relating to the custody, management and control of assets related to the pension scheme.

(2) To this end, institutions based in the Czech Republic

(a) ensure that financial instruments constituting its assets related to the pension plan are treated with professional care and that such instruments are adequately protected;

(b) keep records enabling it to identify at any time its assets related to the pension plan;

(c) inform the supervisory authority, on request, of the manner in which its assets related to the pension plan are maintained;

(d) take the necessary measures to prevent conflicts of interest in connection with the custody of assets;

(e) ensure that the monitoring of compliance with the obligations relating to the custody and management of assets related to the pension plan is carried out with professional care within an institution established in the Czech Republic.

§ 10ab

Management system

(1) An institution based in the Czech Republic will establish an effective governance system that allows proper and prudent management of its activities. This system shall include an adequate and transparent organisational structure with a clear allocation and adequate separation of responsibilities and an effective system for ensuring the transmission of information. Under the governance system, environmental, social and governance factors relating to investment assets shall be considered in investment decisions; the governance system shall be subject to regular internal review. This system must be proportionate to the size, nature, scale and complexity of the activities of an institution based in the Czech Republic.

(2) Institutions based in the Czech Republic will determine in writing and apply principles concerning risk management, internal audit and, where appropriate, actuarial activities. These principles are subject to prior approval by a managing authority or supervisory body of an institution based in the Czech Republic and must be reviewed and adapted at least every 3 years in the light of significant changes in the system or area concerned.

(3) An institution based in the Czech Republic will implement an effective internal control system. The internal control system includes administrative and accounting procedures, the internal control framework and appropriate reporting mechanisms at all levels of the institution based in the Czech Republic.

(4) An institution based in the Czech Republic will take appropriate measures to ensure continuity and proper performance of its activities, including the preparation of contingency plans. For this purpose, an institution based in the Czech Republic uses appropriate and proportionate systems, resources and procedures.

(5) Institutions located in the Czech Republic must have at least two persons who actually manage it. These persons also ensure that institutions based in the Czech Republic comply with legislation.

§ 10ac

Remuneration policy

(1) An institution based in the Czech Republic shall establish and implement a remuneration policy for all persons actually managing the institution, persons performing key functions and other categories of staff whose professional activities have a significant impact on the risk profile of the institution in a manner appropriate to its size and internal organisation, as well as the size, nature, scale and complexity of its activities.

(2) An institution based in the Czech Republic regularly publishes relevant information on remuneration policies.

(3) When establishing and implementing a remuneration policy, institutions based in the Czech Republic shall respect the following principles:

(a) remuneration policy is established, implemented and maintained in accordance with the activities, risk profile, objectives and long-term interest, financial stability and functioning of an institution based in the Czech Republic as a whole and promotes sound, prudent and efficient management of the institution;

(b) remuneration policy is consistent with the long-term interests of participants and beneficiaries of pension plans of an institution established in the Czech Republic;

(c) remuneration policy includes measures aimed at avoiding conflicts of interest;

(d) remuneration policy is consistent with sound and effective risk management and does not encourage risk taking which is incompatible with the risk profile and rules of the institution;

(e) the guidelines for remuneration policy shall be reviewed and updated at least every 3 years;

(f) the elements of governance relating to remuneration and supervision must be clear, transparent and effective.

§ 10ad

Key functions

(1) An institution based in the Czech Republic will establish a risk management function, an internal audit function and an actuarial function as a key function. An institution based in the Czech Republic will allow a person performing a key function to perform his duties effectively, objectively, fairly and independently.

(2) One person or organisational unit may perform more than one key function, except for an internal audit function which must be independent of other key functions.

(3) The person or organisational unit performing a particular key function shall be different from the person or organisational unit performing a similar key function in the contributor.

(4) The person performing a key function shall notify material findings and recommendations in the area for which he is responsible to the administrative, management or supervisory body of the institution based in the Czech Republic.

(5) The person or organisational unit performing a key function shall notify the supervisory authority of an institution having its registered office in the Czech Republic that the administrative, management or supervisory body of that institution has not taken the appropriate measures in time if it has established:

(a) a substantial risk that an institution established in the Czech Republic does not comply with a material legal obligation and has notified the administrative, management or supervisory body of the institution and that such finding could have a serious impact on the interests of the participants and beneficiaries; or

(b) a major infringement of the legislation applicable to an institution having its registered office in the Czech Republic and its activities in the performance of its key functions and having notified this finding to the administrative, management or supervisory body of that institution.

(6) Paragraph 5 shall not apply where a person performing a key function could cause himself or a person close to the risk of prosecution for an offence or offence by notifying the supervisory authority.

§ 10ae

Risk management

(1) An institution established in the Czech Republic shall establish an effective risk management function in a manner consistent with its size, internal organisation, nature, scale and complexity. This function must be structured in a way that allows the risk management system to function.

(2) Within the risk management system of an institution based in the Czech Republic, it shall adopt the reporting strategies and procedures necessary for the regular detection, measurement, monitoring, management and reporting of risks at both individual and aggregated levels to which an institution based in the Czech Republic or pension plans it operates is or could be exposed. The risk management system must be effective and appropriately integrated into the organisational structure and decision-making processes of an institution based in the Czech Republic.

(3) The risk management system shall apply in a manner consistent with the size and internal organisation of an institution based in the Czech Republic, as well as the size, nature, scale and complexity of its activities, to risks that may arise in an institution based in the Czech Republic, at least in the following areas:

(a) underwriting of insurance and technical provisions;

(b) asset and liability management;

(c) investments, in particular derivatives, securitisations and similar liabilities;

(d) liquidity and concentration risk management;

(e) management of operational risks;

(f) insurance and other risk mitigation techniques;

(g) environmental, social and management risks related to the investment portfolio and its management.

(4) If, under the terms of the pension plan, participants and beneficiaries are not also involved, the risk management system shall also take into account those risks from the perspective of the participants and beneficiaries.

§ 10af

Internal audit functions

An institution based in the Czech Republic shall establish an effective internal audit function in a manner consistent with its size, internal organisation, nature, scale and complexity. The internal audit function shall include an assessment of the suitability and effectiveness of the internal control system and other governance elements.

§ 10ag

Actuarial function

(1) If an institution established in the Czech Republic provides cover for biometric risks or guarantees a certain return on investment or benefit, it will establish an effective actuarial function to ensure

(a) the coordination and control of the calculation of technical provisions;

(b) assessing the adequacy of the methodologies and underlying models used in the calculation of technical provisions and assumptions for this purpose;

(c) assessing the adequacy and quality of the data used in the calculation of technical provisions;

(d) comparing the assumptions underlying the calculation of technical provisions with experience;

(e) information to the administrative, management or supervisory body of the institution on the reliability and adequacy of the calculation of technical provisions;

(f) assessing the overall concept of subscription, if the institutions based in the Czech Republic have such a concept,

(g) assessment of the adequacy of insurance arrangements if the institutions located in the Czech Republic have such arrangements;

(h) the effective implementation of the risk management system.

(2) An institution established in the Czech Republic shall appoint at least one independent person responsible for the functioning of the actuarial function.

§ 10ah

Own risk assessment

(1) An institution established in the Czech Republic carries out and records its own risk assessment (hereinafter "risk assessment") in a manner consistent with its size, internal organisation, nature, scale and complexity.

(2) The risk assessment shall be carried out at least every 3 years or without delay after any significant change in the risk profile of an institution based in the Czech Republic or the risk profile of pension plans operated by institutions based in the Czech Republic. If there is a significant change in the risk profile for a specific pension plan, the risk assessment may be limited to that pension plan only.

(3) The risk assessment shall include:

(a) a description of how the risk assessment itself is incorporated into the management process and decision-making processes of an institution based in the Czech Republic;

(b) an assessment of the effectiveness of the risk management system;

(c) an assessment of the overall funding needs of an institution based in the Czech Republic, including, where appropriate, a description of the recovery plan;

(d) the risk assessment for participants and beneficiaries relating to the payment of their pension benefits and the effectiveness of the adjustment measures, taking into account, where appropriate, indexation mechanisms and reduction mechanisms, including the extent to which the pension benefits acquired can be reduced, the conditions for such reduction and the designation of the person who decides on it;

(e) a qualitative assessment of the mechanisms for the protection of pension benefits, including, where appropriate, guarantees, commitments and other types of financial support by the contributor, insurance or reinsurance under the law governing the insurance sector, or the coverage of a pension protection plan for the benefit of an institution established in the Czech Republic or of participants and recipients;

(f) qualitative assessment of operational risk;

(g) an assessment of new or emerging risks, including risks related to climate change, resource use and the environment, social risks and risks related to asset write-offs as a result of a change in legislation, where environmental, social and governance factors are considered in investment decisions.

(4) An institution based in the Czech Republic shall establish and apply methods for identifying and assessing the risks to which it is or could be exposed in the short term and in the long term and which could have an impact on the ability of an institution based in the Czech Republic to meet its obligations. Such methods shall be proportionate to the size, nature, scale and complexity of the risks associated with its activities. The methods shall be described in the risk assessment.

(5) Risk assessment shall be taken into account in the strategic decisions of an institution based in the Czech Republic.

Cross-border transfer

§ 10ai

(1) An institution established in the Czech Republic may transfer liabilities, technical provisions and other rights and obligations as well as the corresponding assets or monetary equivalent resulting from its pension plan, or part thereof, to the receiving institution, provided that the transfer is approved in advance by the majority of the participants and the majority of beneficiaries and, where appropriate, by the contributor, the pension plan or contract between the institution established in the Czech Republic and the contributor. An institution established in the Czech Republic shall provide information on the transfer to participants and recipients sufficiently in advance of the application for a transfer authorisation submitted by the receiving institution to the competent authority of the home Member State.

(2) Where the competent authority of the home Member State of the receiving institution submits to the supervisory authority an application for a transfer permit as referred to in paragraph 1 which is complete and does not suffer from other defects, the supervisory authority shall communicate its opinion on the application to the competent authority of the receiving institution's home Member State within 8 weeks of the date on which the request was received.

(3) The supervisory authority shall agree to the transfer referred to in paragraph 1 if:

(a) in the case of a partial transfer of liabilities, technical provisions and other rights and obligations, as well as the corresponding assets or their cash equivalent resulting from the pension plan, the long-term interests of the participants and beneficiaries in the rest of the pension plan shall be adequately protected;

(b) the rights of the participants and beneficiaries shall be maintained after the transfer referred to in paragraph 1;

(c) the assets or their monetary equivalent to be transferred are sufficient and appropriate to cover liabilities, technical provisions and other rights and obligations to be transferred; and

(d) the cost of the transfer is not borne by the remaining participants and beneficiaries of an institution established in the Czech Republic or by existing participants and recipients of the receiving institution.

(4) If the transfer referred to in paragraph 1 leads to a cross-border activity, the supervisory authority shall, within 4 weeks of the date of the consent referred to in paragraph 5, inform the competent authority of the receiving institution's home Member State also of the provisions of the social and labour legislation on occupational pension insurance under which the pension plan is to be operated and of the provisions on the information obligations applicable to cross-border activities in the Czech Republic.

(5) If the transfer referred to in paragraph 1 leads to a cross-border activity, the recipient institution in the Czech Republic may start to carry out occupational pension insurance after having been notified of the decision granting the authorisation, or after the period during which the competent authority of its home Member State was to notify it of that decision in vain or in which it was to communicate the information referred to in paragraph 4.

§ 10aj

(1) An institution established in the Czech Republic may accept from the transferring institution commitments, technical provisions and other rights and obligations, as well as the corresponding assets or monetary equivalent, resulting from its pension plan or part thereof, provided that the transfer is approved in advance by the majority of the participants and the majority of the beneficiaries and, where appropriate, by the contributor, the pension plan or contract between the transferring institution and the contributor. An institution established in the Czech Republic shall provide information on the transfer of participants and beneficiaries sufficiently in advance of the submission of its application for authorisation to the supervisory authority referred to in paragraph 2.

(2) The application for authorisation to transfer pursuant to paragraph 1 shall contain:

(a) a contract concluded in writing between the transferring institution and the institution having its registered office in the Czech Republic which determines the terms of the transfer;

(b) a description of the main characteristics of the pension plan;

(c) a description of the liabilities, technical provisions and other rights and obligations as well as the corresponding assets or their cash equivalent to be transferred;

(d) the name and registered office of the transferring institution and institution having its registered office in the Czech Republic and the Member State in which the activity of the transferring institution is authorised;

(e) the name and address of the contributor;

(f) proof of prior approval of the transfer referred to in paragraph 1 by a majority of the participants and a majority of the beneficiaries and, where appropriate, by the contributor; and

(g) where applicable, the name of the Member State whose social and labour legislation relating to occupational pensions applies to the relevant pension scheme.

(3) The supervisory authority shall forward the application for authorisation for transfer referred to in paragraph 1, which shall be complete and not suffer from any other defects, without undue delay to the competent authority of the home Member State of the transferring institution.

(4) The supervisory authority shall grant the transfer authorisation referred to in paragraph 1 if:

Citation	Act No. 165 / 2019 Coll., amending Act No. 340 / 2006 Coll., on the Activities of Occupational Pensions Institutions, as amended
Regulation Type	Law
Author	-
Collection	Code of Laws

Date of Promulgation	01.07.2019
Effective from	01.07.2019
Effective until	-
Status	Valid

Act No. 165 / 2019 Coll.

Act amending Act No. 340 / 2006 Coll., on the Activities of Occupational Pensions Institutions, as amended

Contents