For the Pension Provision Debeka and Us Develop Objective Assessment Frameworks for Its Customer Service

The PIA-Basismodell, developed by us at the Fraunhofer ITWM for the Produktinformationsstelle Altersvorsorge gGmbH (PIA), visualizes chances and risks of the capital market. In doing so, it helps to make well-founded decisions when comparing products – independently and impartially.

Together with our project partner, we have further developed the PIA-Basismodell – already recognized as the standard in private pension provision. The aim was to create a framework that meets the growing requirements for customer service, regulation and consumer protection. The most important innovation: an additional module for real interest rate modeling. This allows to simulate inflation trends.

To evaluate pension products taking real purchasing power into account is of central interest to the customers and shows. This makes it clear how inflation affects old-age provision. This helps Debeka customers to better assess their situation in old age and to identify gaps in provision. Our project provides solutions to key questions:

• How can inflation be realistically modeled? What does the model for the consumer price index look like?
• How does the value of pension products change under different inflation scenarios?
• How is the model calibrated i.e. adjusted to the market situations?
• Which inflation-linked products can be priced?
• How are market forecasts and assessments by experts incorporated into the calculations?
• What is the model's scope and precision?

In addition to methodological research, we are developing application tools. With this project, we – the Fraunhofer ITWM and Debeka – are strategically positioning ourselves for future trends and the growing information needs of customers. Issues of consumer protection are always taken into account. As an institute for applied research, we support the industry in implementing regulatory requirements and legal initiatives to ensure high quality.

New regulatory requirements are currently being developed at European and national level, which are placing greater responsibility on supervisory authorities and insurers in particular. In 2023, BaFin published information sheet 01/2023 [only available in German], which deals with the verification of the benefits of capital-forming life insurance products for customers. A central component: the consideration of real value development in order to realistically reflect the loss of purchasing power due to inflation.

Products are to be examined with the help of scenario analyses, with BaFin intending to use the standard for Packaged Retail and Insurance-Based Investment Products (PRIIPs). The German Actuarial Association (DAV) recommends the PIA-Basismodell as the calculational basis for the risk indicators and the illustrative product scenarios.

The topic is also gaining momentum at European level: In October 2024, EIOPA (European Insurance and Occupational Pensions Authority) published a consultation paper on the topic of »Value for Money«. As a scientific institution with many years of expertise in the classification of pension products, we submitted a statement to support supervisory authorities in making the benefits for customers measurable and assessable.

In 2018, Debeka approached our team at Fraunhofer ITWM with the intention to use the PIA-Basismodell for its company pension products. The aim of the so-called »Transparency Initiative« is to offer customers a uniform and transparent evaluation of the products. As Fraunhofer ITWM, we embody objectivity and neutrality with our model standard – important factors for transparency, as so far, provisioning institutions have mostly calculated return indicators themselves.

At the beginning of the project, the focus was on the analysis of occupational pension tariffs and the modeling of diversification effects for equity investments. These topics are still relevant—particularly, equity modeling gains relevance in terms of demonstrating the benefits of pension products for customers.

»In the sale of company pension schemes, the model proves to be a useful tool for us,« reports Dr. Matthias Herzog, who is responsible for training sales representatives at Debeka. Since 2023, Debeka has been using the model to present retirement solutions and pension products to companies in a particularly comprehensive and transparent way. »Our customers benefit from our ability to visualize different market developments using scenarios – this creates a much better understanding of the complexity of structured products and the impact of different investment strategies.«

Debeka focuses on companies that want to establish a company pension scheme for their employees. Here, the model helps to demonstrate both opportunities and risks in a fair and comprehensible way. »The scenario analyses help us to present complex retirement solutions in an understandable way and to make well-founded decisions together with our customers,« says Herzog. The model also makes an important contribution internally: every year, around 20 to 25 new customer service representatives are trained, who use the scenario calculations to develop a deeper understanding of Debeka's products and the dynamics of the capital markets.