Transposition of the EU Directive on the Transferability of Supplementary Pension Rights

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By 21 May 2018, Belgium must take the necessary steps to achieve compliance with the EU requirements on the transferability of supplementary pension rights (the so-called "Pensions Portability Directive").

Below you will find further information about the concrete impact of the amendments to the legislation on supplementary pensions that were passed into law on 21 June 2018.


What?

The elimination of the minimum vesting age of 25 ("waiting period"). In other words, all staff members must be enrolled in the pension plan immediately upon joining the company, regardless of any eligibility requirements on age and/or years of service stipulated in the plan regulations.
Other eligibility requirements will, however, continue to apply, such as position classification/pay grade. The legislation also has no bearing on, for example, the option to link the individual contribution percentage to the number of years of service.

The elimination of the one-year period to acquire supplementary pension rights ("vesting period"): pension rights will be irrevocably acquired ("vested") as of Day One of enrolment. If the value of the vested rights is less than or equal to EUR 150 on the departure date, the plan participant will become a "dormant" participant by default. No other options will be authorised. In other words, the vested rights will continue to be managed by the same pension institution and will remain invested in the former employer’s group insurance plan. The accrued benefits can only be distributed upon retirement.

The right for participants to obtain additional information upon request on how termination of the employment relationship would affect their supplementary pension rights and the conditions governing the future treatment of their dormant pension rights. Between our plan regulations and other documents issued by AG Insurance, we have already achieved compliance in this area.


Who? When?

This new legislation will apply as of 21 May 2018. This means that the EU directive has been transposed into national law. The right to obtain additional information will also apply as of the same date.

As for the "waiting period" and the "vesting period", the new legislation will apply as of
1 January 2019 to:

new hires as of 1 January 2019

staff members employed prior to 1 January 2019 but that did not fulfil the eligibility and/or vesting requirements for a supplementary pension under the previous legislation

Sample case 1

A 23-year-old staff member joins the company on 1 April 2018. According to the regulations, the minimum vesting age is 25.
Under the current legislation: As the staff member is under the age of 25 on
1 April 2018, s/he cannot be enrolled in the pension plan upon joining the company
Under the new "Portability" directive: The staff member will be enrolled in the plan on  1 January 2019

Sample case 2

A staff member joins the company on 1 September 2018 and quits or is dismissed on
1 August 2019. According to the regulations, enrolment in the pension plan will be effective immediately and the pension rights will be vested after one year of enrolment.

Under the current legislation: The staff member will have no claim to the accrued reserves as s/he will have been enrolled in the plan for less than one year

Under the new "Portability" directive: As the staff member fulfils the vesting criteria on 1 January 2019, s/he will be entitled to claim the vested rights for a period of
11 months, i.e. the reserves that will have accrued between 1 September 2018 and
1 Augustus 2019

We will keep you informed of the practical consequences on your supplementary pension plans.

In the meantime, if you have any questions or require further clarification, you are welcome to contact your regular representative at any time.