Digital

Digital Operational Resilience

DORA entered into force on 16 January 2023 and will apply from 17 January 2025. It aims to establish a comprehensive framework for digital operational resilience in the financial services sector. We welcome the EU’s commitment to establishing a digital operational resilience in the financial service sector. We advocate for the specificities of IORPs and their services providers to be fully considered in the ESAs approach. The principle of proportionality should also be correctly reflected in level 2 measures to ensure a risk and principle-based approach. 

Framework for Financial Data Access (FIDA) / Open Finance

PensionsEurope welcomes the Commission’s proposal for a framework for Financial Data access (FIDA) published in June 2023  which is a key component of the Commission’s digital finance strategy presented in September 2020. PensionsEurope recognises that there is a technology-driven trend towards greater use of data and data sharing in finance and beyond as indicated in our position paper published in September 2023. We also indicate that there is a need to rely on existing pension tracking services (PTS).

However, because of the embeddedness of occupational pension entitlements in employment contracts, their restricted accessibility for members, and the “social nature” of IORPs, we are advocating to clearly distinguish IORPs and related occupational pension schemes from others financial entities by restricting FIDA scope to those “accessible for all interested consumer” as highlighted in our last statement published in April 2024. 

We are also active on the Open Insurance workstream, which is led by EIOPA. While EIOPA indicated in its July 2023 consultation paper on an Open Insurance use case that it does not specifically address the Commission FIDA proposal, it also suggests that the feedback gathered could help future technical discussions. Here we want to highlight that occupational pensions are not a typical financial product because providers cannot be switched like insurance products as there is a triangular relationship between the employee, the employer, and the pension fund.

Artificial intelligence

The IA Act was published at the OJEU on 12 July 2024. The IA Act creates a classification system as regards AI systems between 4 levels; 1) Minimal risk, 2) Limited risk, 3) high risk, and 4) Unacceptable risk, under the supervision of the newly established European AI Office.

PensionsEurope submitted on  13 September 2024, its answer to the Commission consultation on AI in the financial sector. The consultation aims to inform the Commission DGs on the use cases and impact of AI in financial services.

We indicated that there are fewer AI use cases in our sector than in the others as the IORPs landscape is very heterogeneous, with many small entities but also very big in some cases, dealing first and foremost with members and beneficiaries as well as customers.

However, AI is being used for 1) the dialogue between pension funds and members and beneficiaries through Chatbots, 2) asset management optimization, and 3) employer use cases. Furthermore, there are no AI pension use cases that would be categorised as unacceptable and high-risk as outlined in the AI Act. Risks of bias and discrimination are low in pension AI use cases.

Finally, a principle-based, risk-based, and stakeholder-driven approach is the best way to get to effective controls that are relevant for pension provision. To tailor obligations as much as possible to pension providers, any legislation of AI in the financial sector should take the form of a sectoral approach for IORPs rather than a horizontal one.