As of 10 March 2021, new European laws and regulations apply to the provision of information on the sustainability of investments. This regulation is called the Sustainable Finance Disclosure Regulation (SFDR). But what does it involve?
The SFDR is part of the European Commission’s Action Plan for Financing Sustainable Growth. In addition to the SFDR, this action plan proposes rules on sustainable classifications (taxonomies) and sustainable investment benchmarks. Sustainable finance is the EU’s response to translate obligations ensuing from the Paris Agreement into rules for financial markets. The EU rules should help investors make informed investment decisions in the climate transition, thus creating a level playing field. As a result of the SFDR, SNPS will inform its participants in a transparent way about how the fund invests sustainably and how negative sustainability effects are taken into account in investment decisions.
Another consequence of the Action Plan for Financing Sustainable Growth is the introduction of a harmonised classification system (‘taxonomy’) for determining what qualifies as a sustainable economic activity. This regulation will enter into force within the EU on 1 January 2022. What does it mean in concrete terms? Steps are being taken to make sustainable investment the norm. The rules aim to increase transparency on the sustainability of investments by providing unambiguous definitions and rules. From now on, SNPS will have to show what percentage of the investments is actually sustainable according to this classification. This prevents organisations from pretending to be more sustainable or ‘greener’ than they actually are. In line with this, investors who want to invest in activities that have a positive impact on the environment, will be informed about this.
As a result of the Pension Agreement concluded in 2020, a number of elements in pension legislation are expected to change earlier, including the possibility for the participant to withdraw part of the pension in one go: the “lump sum”. This allows for more customisation of the pension scheme as provided by the employer. For example, under certain conditions, SNPS participants will be given the opportunity to take out a lump sum of up to 10 per cent of their accumulated pension assets on the retirement date. This part of the legislation is expected to enter into force on 1 January 2023.
This bill contains new rules for the division of pensions in the event of divorce. These new rules are more transparent for participants than the current regulations. According to the bill, ex-partners receive their own entitlement to retirement pension after divorce, which means that the ex-partners are no longer dependent on each other for their pensions either. After the new rules come into force, SNPS will automatically make arrangements for this division for its participants who have divorced, unless the participants wish to deviate from this standard arrangement. Also, the partner’s pension for the ex-partner (‘special partner’s pension’) will only be calculated over the marital period. At the moment, the pre-marital period is also taken into account. The new rules will apply to divorces as from the entry into force of this law. The government is planning for the new law to enter into force on 1 January 2022, however, it remains uncertain whether that date can be met.