Your company falls short of minimum funding requirements
What is minimum funding?
The Supplementary Pensions Act stipulates that the reserves (i.e. the mathematical reserves and the balance of the financing fund) that an employer invests with an insurer for the benefits of its staff members are subject to minimum funding requirements, otherwise known as minimum reserves. If the minimum is not reached, we call it underfunding.
What happens if underfunding occurs?
If funding falls short of the minimum, AG EB must systematically require payment of the missing amount. This happens on a monthly basis at the hand of the Payment order.
From that moment you will have six months to rectify the underfunding. If payment is not received within these six months, the law stipulates that the group insurance must be reduced.
Funding can occur collectively. Even if calculations are made individually, there will be collective minimum funding, with the underfunding being remedied by making remittances into the financing fund and not on the individual contracts of the staff members.
FAQ 1: What is the purpose of the 'Minimum Funding Status' document?
The 'Minimum funding Satus' document is purely informative and provides additional information about the underfunding remittance required by means of the Payment order. It is not the intention to pay the amount shown in this document.
This document shows
the contractual shortfall. The stated amount is the difference between the minimum funding and the reserves on the contract.
active employees for whom the difference is positive, the first document will show the contractual shortfall per member. In the subsequent documents, the amounts will be shown for each member or added together, depending on the level of detail of your statements.
former employees who have left the amount of their supplementary pension in the pension plan ('sleepers'), no overview per person will be provided and the amounts will always be added together. Details of this category of employees can be found in the csv-format statement placed on AG EB Online or obtainable from your management team.
For members not shown in the document, the mathematical reserves are sufficiently high to satisfy the minimum funding requirement. For them, the contractual shortfall on the contract will be equal to 0.
FAQ 2: When is remittance for underfunding required on the Payment order?
The total contractual shortfall in the document headed 'Minimum Funding Status' will first be compared with the balance in the financing fund. Remittance of the underfunded amount (together with any other contributions) will not be required by means of the Payment order until it has been established that the balance of the financing fund is insufficient.
The contractual shortfall and the balance of the financing fund will then be stated in the Payment order.
FAQ 3: Why is the amount in the 'Minimum Funding Status' document still the same despite remittance last month of the underfunding?
A remittance for underfunding has no impact on the amount mentioned on the document 'Minimum Funding Status' (this document is only available in French and Dutch). It will only increase the balance in the financing fund (and not the contractual reserves). So it is logical that the document shows similar amounts month after month, even after a remittance. But this does not mean that an underfunding payment will be required every month.
The total contractual shortfall stated in the document will be compared with the balance of the financing fund (which will have increased after your remittance). In other words, your remittance means that no underfunding amount (or a lower amount) will be required by means of the Payment order.