WAP/LPC guarantee goes up to 2.50% - AG Employee Benefits
WAP/LPC guarantee goes up

Published on 30/05/2024


Statutory minimum return goes up due to rising markets


​From 1 January 2025, the statutory guaranteed return for supplementary pensions will be 2.50%. The first increase since 2016 is excellent news for your employees. But what does it mean for you as an employer? In this article, you will find out how a pension plan with AG Employee Benefits ensures you have the maximum support needed to meet your obligations. With AG, you can rest easy. 

What is the statutory minimum guarantee again?

To protect affiliates of a second-pillar pension plan, a statutory guaranteed minimum return (the 'WAP'/'LPC' guarantee) has been in place since 2016. The Law on Complementary Pensions (WAP/LPC) stipulates that, as an employer, you must guarantee members a minimum return upon retirement, or when they transfer their reserves upon leaving. In defined contribution and cash-balance type pension plans, the guarantee applies to both employer and employee contributions. In 'defined benefit' plans, the guarantee applies only to employee contributions. 

Why is the WAP/LPC guarantee going up?​

Since 2016, the statutory minimum return on the second pillar pension is determined annually on 1 June in accordance with a formula laid down by law, and takes effect on 1 January of the following year. The minimum return is equal to 85% of the average return on June 1st over the past 24 months of the Belgian 10-year OLOs, rounded to the nearest 25 basis points. The WAP/LPC guarantee has a lower limit of 1.75% and an upper limit of 3.75%. The minimum yield in January 2016 clocked in at 1.75% and due to the low interest rate environment of recent years, it has remained unchanged since then. However, with market interest rates picking up again, the WAP/LPC guarantee is being increased for the first time, to 2.50%.

How can you meet your obligation?

​​From 1 January 2025, the statutory minimum guarantee becomes 2.50% and you, as an employer, are obliged to guarantee this return upon retirement or upon transfer of reserves after leaving the company. If your pension plan's insurer does not achieve this return, you have to make up the difference.

But it doesn't have to come to that. If you have a branch 21 plan, chances are the new minimum return will only apply to new premiums from 1 January 2025. In technical terms, this system is called the 'horizontal' method. In branch 23, the new minimum return applies not only to premiums paid from 1 January 2025, but also to reserves accumulated earlier. This is called the 'vertical' method.

Global pension player AG's solutions​

​​At AG, when managing your pension plan, our focus is on a solid and stable return. A soundly managed branch 21 portfolio allows us to offer a stable guaranteed interest rate, supplemented by a potential profit sharing. In the past, we achieved attractive net total returns that provided peace of mind. With branch 23, we aim for a higher long-term return, albeit more volatile. Moreover, as a global pension player, we offer hybrid solutions where you can combine both options. It's up to you. Whatever you choose, you can rest assured: you're in good hands with us.​

​Pension Forum - everything you need to know about the WAP/LPC guarantee

Would you like to find out in detail what the WAP/LPC guarantee entails, which products and which part of the reserves this return applies to, how shortfalls in the statutory return guarantee arise and are treated, and how our solutions aim to mitigate these shortfalls?

Register now for our in-depth Pension Forum this autumn.​

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